UK pension fund charge cap to be delayed - minister
By Simon Jessop and Jemima Kelly
LONDON (Reuters) - A planned cap on the fees charged by pension fund providers to Britain's savers will be delayed by a year until April 2015 after industry lobbying that it could hinder attempts to help thousands more save for retirement.
The delay would allow companies and industry to focus on enrolling those workers at 30,000 small and mid-sized companies currently without a pension into one through the coalition government's flagship policy of "auto-enrolment".
Speaking at a conference organised by the Confederation of British Industry (CBI), Pensions Minister Steve Webb said the cap, which had been due to come into force in early 2014, after being announced in October last year, had been delayed as the government had decided the timeframe involved was too short.
"Changing the rules at 12 weeks' notice ... didn't quite stack up. That's why the changes that we will make will be in April 2015," he said. The extra time would be used to address other issues around the quality of the pension funds into which workers' savings would be invested, he added.
The Association of British Insurers backed the delay, citing the potential disruption to companies and pension providers looking to complete the auto-enrolment process successfully, although some saw it as a missed opportunity.
"Legacy schemes with high charges ... can cause major damage to employees' retirement savings if employers just let this opportunity drift," said Adrian Boulding, pensions strategy director at financial services group Legal & General, in a statement.
Legal & General has supported a cap, arguing it would ensure savers get value for money at a time when responsibility for retirement saving is being placed on individuals rather than employers or the state.
The government estimates that more than 150,000 people are stuck in schemes where the fees exceed 1 percent, though new auto-enrolment schemes typically charge just 0.51 percent, the Office of Fair Trading said last year.
Among the options being considered are blanket fee caps of 0.75 percent or 1 percent, and allowing fees above 0.75 percent only when an employer seeks a special exemption.
The government said in October that reducing an annual fee from 1.5 percent to 0.75 percent would give someone who saved 100 pounds ($170) a month for 46 years an extra 100,000 pounds at retirement.
(Editing by Chris Vellacott, Tom Pfeiffer and David Evans)
