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North-East expert says cap will give UK pensions a "new dynamic"
GOVERNMENT plans to cap pension providers' management fees would be a positive step forward, a North-East expert has said.
The Government has unveiled proposals to cap fees between 0.75 per cent and one per cent, which it says could save people tens of thousands of pounds.
Ministers are looking at caps at both levels, as well as a two-tier scheme, which will cap pension providers at 0.75 per cent, rising to one per cent if they reveal why they must increase charges.
Lee Stamp, director at PwC, in Newcastle, said: “Introducing a cap on pension charges is a step forward but it is vital that 0.75 per cent is used as the maximum amount that can be charged, rather than the default option.
“Many schemes, particularly master trusts and those for larger employers, should be able to charge less due to economies of scale, and competition should also help drive down charges.
“Capping pension charges introduces a completely new dynamic to pensions in the UK.
“Governments and regulators now have the ability to name and shame pension schemes that charge too much, meaning employers’ own brands could be on the line if the pension scheme they offer their employees is not up to scratch.”
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