“We are supportive of any measure which will improve value for money for scheme members and increase transparency and although a cap at 0.75% for the default is achievable, it does present some challenges. The potential stifling of innovation is a concern and it will be interesting to see whether the cap affects smaller schemes having access to more innovative investment strategies. Auto-enrolment has increased the desire for new products and we hope that this charge cap will not discourage development of new ideas in the pensions market.
“For members wanting to move outside of the default, allowing them to choose other investment funds or strategies, which may be more expensive than 0.75%, is a sensible approach.
“For those who have already been through or are in the process of staging for auto-enrolment, it is possible that their schemes are not at the new cap level and given the April 2015 deadline, these schemes will need reviewing immediately.
“When placed in the wider context of the recent Budget, these announcements mean it is absolutely vital that measures are quickly put in place to educate and engage members about the impact of these changes and to ensure they understand the added value a pension will bring them. This is in addition to the value of good scheme level governance, where scheme sponsors or trustees need to understand the pension arrangements they have in place and adapt them accordingly over time.”