Government comes under fire over pension plan fees
March 16, 2010 by admin
Filed under Career News and Advice
Liberal Democrat pension spokesman Steve Webb has criticised the government plans for a new occupational pension scheme, warning that an upfront charge will undermine its popularity.
Government plans to create an occupational pension scheme covering up to 10m workers came under fire today after ministers revealed new joiners will pay higher charges than expected.
Critics of the scheme warned that millions of workers would pay higher charges than they would on the standard occupational scheme after it was revealed that a 2% contribution fee would be added to an 0.3% annual management charge.
The Department of Work and Pensions said the contribution fee will be applied until the set-up costs of the scheme are paid for, but failed to indicate how many years it might take before the fee is lifted.
Pension experts said most occupational pensions charged less than 0.5% without levying a contribution fee, meaning the scheme would be one of the most expensive savings schemes of its kind. They said first joiners, who would pay the 2% charge, would subsidise savers in later years who signed up after the contribution fee was dropped…
Read the original article at Guardian