Employers are advised to keep a close watch on pension scheme charges which were capped by the Government in a move designed to put more money into the pockets of those paying into pension funds.
Owen Kyffin, a director of the leading business advisers Whitley Simpson said: “The move by the Government to cap pension fees to 0.75 per cent from April to end high levies that deplete customers’ savings has been widely praised. Ministers claim it should transfer at least £200 million from insurance company profits into the pockets of savers.
“But what is worrying is that some commentators are warning that some pension providers may hit employers with what they describe as supplementary fees outside the 0.75 per cent Government cap.”
Pension companies take annual fees for managing money saved into company schemes and the charges can range from 0.5 per cent a year to more than 2 per cent. Reducing the higher charges to 0.75 per cent will allow savers’ funds to grow more quickly to the detriment of pension providers, some of whom have already seen profits dropping.
Owen said: “The Government has said that it is taking action to ensure workers have access to good quality pension schemes, protected from high and unfair charges.
“It is necessary, however, that businesses that want staff to benefit from the recent capping action should keep a close watch on their pension providers in case they try to recoup profits through introducing extra charges in some way.”
Whitley Stimpson is the leading adviser on financial matters for businesses and individuals and Owen Kyffin can be contacted on 01295 270200 or by email at email@example.com