Of interest to all those providing contract-based schemes to fulfil their auto-enrolment duties is the Financial Conduct Authority’s (FCA) consultation paper on charges in workplace personal pension schemes (including stakeholder schemes).
These are the contract-based scheme equivalent of the DWP’s consultation on occupational scheme charges which we included in our October update. Although the two consultations are separate, it is likely that similar regulations will be produced for both occupational and contract-based schemes as the DWP and FCA are working closely together in relation to the charging policies for the pension arrangements for which they are respectively responsible.
The paper outlines the proposed new rules set out below:
- a cap on the charges within default funds equivalent to 0.75 per cent per annum of funds under management from April 2015;
- prevention of firms from paying or receiving consultancy charges also from April 2015;
- prevention of firms from paying commission or other charges for advice which are not initiated by scheme members from April 2016; and
- prevention of firms from using differential charges based on whether the member is currently contributing or not from April 2016.
The consultation runs until 31 December 2014. The FCA intends to publish the rules in a policy statement inFebruary 2015. The proposed rules for the charge cap and other provisions, if made following consultation, will come into force on 6 April 2015 and firms will be expected to comply from that date.
View the consultation paper.