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07 Oct 2013

DWP Considers Ways To Help Over-Charged Pension Savers

The Department for Work and Pensions (DWP) will be looking at possible ways to assist people whose retirement savings have been hit by excessive charges and fees.

According to pension minister Steve Webb, many UK workers that started saving years ago into a number of old pension schemes are charged over-the-top fees and exit penalties. Although these schemes were legal at the time, they were questionable from a moral point of view. With this, the government is developing a plan to help such savers, IFA Online explained.

Webb said that although it was now obvious those schemes did not offer good value for money, they were legal contracts that parties had signed, and there was only so much the government could to do to interfere with these decisions. However, it would not be fair to leave people in such a situation and do nothing, and that is why the DWP is looking for ways to help, the website reported.

Meanwhile, the pension minister confirmed that the autumn DWP consultation will also include a proposal for a cap on charges for workplace pension schemes under the automatic enrolment. Most experts predict that the draft proposal would set a 1% cap, and would only refer to savers who are automatically enrolled in default funds. The autumn consultation will be looking deeply into the quality of auto-enrolment pension schemes and their actual value, Webb pointed out.

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