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Pension charge cap to be delayed for a year

Pension charge cap to be delayed for a year

Plans to cap pension charges for auto-enrolment schemes will be delayed by a year or more, according to the Financial Times.

In October the Department for Work and Pensions (DWP) proposed to cap pension charges for auto-enrolment schemes at 0.75% or 1%.

The paper, put forward by pensions minister Steve Webb (pictured), planned to implement the cap in April, when smaller firms begin staging.

However implementation will be delayed for at least a year.

It comes after the Regulatory Policy Committee (RPC) heavily criticised the DWP’s failure to conduct a satisfactory assessment of the impact of a charge cap.

The RPC, which is an independent government body, said the DWP’s impact assessment was ‘not fit for purpose’ and did ‘not adequately demonstrate’ why a charge cap was the right solution.

The consultation proposed a 1% charge cap, in line with current stakeholder products.

The third option is a two tier ‘comply or explain’ cap where there would be a standard cap of 0.75% for qualifying schemes, with a higher cap of 1% available to employers who reported to the Pensions Regulator why the scheme charges exceeded 0.75%.

It said a final cap could lie in between 1% and 0.75% depending on the responses to the consultation. 

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Profile: The opportunity set that attracted Brett Williams to wealth management

Profile: The opportunity set that attracted Brett Williams to wealth management

Brett Williams is best known for helping to build some of the biggest platforms in the IFA market.He made the move over to wealth management to head SEI’s UK business earlier this year in the belief that this is where the best opportunities now lie.

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