For immediate release: Thursday 27 March 2014
Morten Nilsson, CEO of NOW: Pensions comments on today’s announcement that there will be a cap on pension charges at 0.75% for all schemes used for auto enrolment from April 2015: “While many will have been expecting the Pensions Minister to be bolder, today’s announcement is good, if not great news for pension savers.
A cap on charges will help to support the long term success of auto enrolment and build consumer confidence in pension saving.
But, today’s news will be of little comfort to the thousands of people who are currently trapped in the funds of older schemes with high and disguised charges. More needs to be done to help these people move their funds without penalty.”
Using the scenarios given in the DWP consultation document, NOW: Pensions examined the total percentage of the pot lost to charges in different scenarios:
|AMC%||Pension pot with charges (%)||Pension pot lost due to charges (%)|
|Individual ASaves throughout their working life from age 22 to 68||1%||75.28||24.18|
|Individual B Saves from age 45 until SPa||1%||88.25||11.75|
|Individual CSaves from age 22 until SPa with a 15 year break at age 30||1%||77.59||22.41|
|Individual DSaves from age 25 to 50 and then remains deferred until SPa||1%||72.35||27.65|
NOW: Pensions charges 0.3% Annual Management Charge (AMC) and £1.50 per month administration charge
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For further information:
Tel: 0203 640 9075 / 07941 105879
Tel: +44 207 294 3620
Notes to editors:
DWP scenarios based on:
- Initial annual contribution: £1,200
- Investment growth: 7.00%
- Annual contributions growth: 4.00%
- State Pension age (SPa) of 68 – except individual B who is assumed to reach SPa at age 67 (in line with government proposals)
- NOW: Pensions charging structure is based on 0.3% AMC and £1.50pm administration charge
NOW: Pensions www.nowpensions.com
NOW: Pensions is an independent, multi-employer trust serving thousands of employers and hundreds of thousands of employees from a wide range of sectors.
A subsidiary of one of Europe’s largest pension funds, Danish pension scheme ATP, NOW: Pensions offers a simple and cost effective workplace pension solution direct to employers and via advisers and the payroll sector.
In April 2013, NOW: Pensions became the first master trust to attain the NAPF’s new PQM Ready Standard. The benchmark shows employers that NOW: Pensions is a well governed pension scheme with low charges and good member communications.
The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:
- Christopher Daykin, former Government Actuary
- John Monks, member of House of Lords and former General Secretary of ETUC and TUC
- Win Robbins, former Head of European Fixed Income at Barclays Global Investors
- Imelda Walsh, former Group HR Director of Sainsbury’s
- Nigel Waterson, former Shadow Pensions Minister
Charges are just £1.50 per month administration charge (reduced administration charge of £0.30 – £1.00 to be applied during auto enrolment phasing for lower earners) plus a 0.3% annual product investment management charge, with no hidden charges.