Pensions Fee Cap Boost
February 5th, 2015
For those of you who read The Daily Telegraph, you would have seen some big news on the front page with regards to fee caps on workplace pensions going forward. They claim workers could potentially gain over £100,000 extra in their pension pots by the time they come to take their benefits.
This comes after draft regulations were yesterday put before parliament to cap fees on company pensions at just 0.75% per annum. Based on someone joining a pension scheme today at aged 22, on the assumption they contribute £1,200 a year initially, increasing 4% per annum and achieving an average return of 7% a year, the reduced charges would seem then gain an extra £103,700 should they decide to retire after age 68.
Official calculations showed historically savers lost more than a third of their pot, with the cap reducing this to under a fifth.
The significance in the timing of the announcement ensures that the ban will take effect before the general election which may have scuppered the reforms.
If you get a chance to grab a copy of The Telegraph today the full article gives a bit more detail along with comments from pensions minister Steve Webb.