16th January 2015
Consumers could face an extra £340 million of pension fees in the next year if the government does not tackle sky-high charges on schemes quickly.
In December an audit of charges paid on pension schemes revealed up to £26 billion of pension assets were being charged a fee over the 0.75% cap implemented on auto-enrolled schemes.
Those companies charging over 0.75% have been given to June to justify their higher fees and make any changes by December, giving pension providers another nearly 12 months to charge extortionate fees.
Analysis by financial trade magazine Money Marketing, shows that if changes are not made swiftly consumers could pay an extra £341.4 million in charges by the end of the year, providing all fees were cut to 0.75%.
Following the audit of pension schemes, pensions minister Steve Webb said he was ‘genuinely shocked’ and would be contacting pension providers.
‘I am going to talk to them all one by one and challenge them to come up with big, bold solutions,’ he said.
However, there has been criticism of the slow pace of change and that pension providers have been given another year to change their ways.
Speaking to Money Marketing on its findings, Labour shadow pensions minister Gregg McClymont said: ‘£340 million is a huge amount of savings being siphoned from hard-pressed people if the government continues to delay.
‘These charges are a scandal and the government must act now on this report to end these rip-offs. It’s time for the government to act to protect savers who do the right thing, work hard and save.’