Crack down on ‘rip-off’ pensions advice charges

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Workers automatically enrolled into pensions schemes will not see their savings raided to cover advice received by employers under a Government crackdown on rip-off charges.

Pensions minister Steve Webb announced plans to tackle “high and inappropriate” pension fees by banning charges for advice given to employers for auto-enrolment schemes.

He said it was the first step as part of a clampdown on consultancy charges following a six-month review that found more needed to be done to stop advisers deducting high fees from pension pots.

The Government also discovered that employees who move jobs regularly were being hit particularly hard by consultancy charges as they switched schemes.

It added that it was looking at capping charges on the default funds within schemes following an investigation of the entire workplace pensions market by the Office of Fair Trading (OFT) and plans to publish a consultation in the autumn.

Mr Webb said: “With millions of people taking up pension saving for the first time under automatic enrolment, we have to give people confidence that they will get good value for money. That is why we are banning consultancy charges, where scheme members end up paying for advice given to their employer.”