Auto enrolment: Charge cap rules finalised and published by regulator

The FCA has published final rules this morning on implementing a charge cap on default funds for automatic enrolment. The regulator has also outlined more details on banning consultancy charges, differential charges and commission charging practices in workplace personal pension schemes which it oversees.Similar measures will be implemented by the Department for Work and Pensions in regulations for occupational schemes for which The Pensions Regulator will be responsible.{desktop}{/desktop}{mobile}{/mobile}The FCA summarised its main measures as:• A cap on the charges within default funds equivalent to 0.75% per year of funds undermanagement from 6 April 2015.• Preventing firms from paying or receiving consultancy charges from 6 April 2015.• Preventing firms from paying commission or other charges for advice that are not initiatedby scheme members from 6 April 2016.• Preventing firms from using differential charges based on whether the member is currentlycontributing or not from 6 April 2016.Christopher Woolard, director of strategy and competition at the FCA said: "It is important that those saving into workplace pension schemes get value for money and this is especially true for those who are not playing an active role in deciding where their money is invested."Schemes need to work effectively for members and the charge cap, alongside other new measures such as independent governance committees and transparency of costs, will help to ensure this going forward."The charge cap will apply from the later of:• 6 April 2015• the date from which a scheme becomes a Qualifying Scheme for an employerThe FCA said this means that for automatic enrolment schemes already in operation before 6 April 2015, firms will be required to ensure compliance with the charge cap from this date onwards. For employers with a later staging date for auto-enrolment, the charge cap will apply from the date a scheme becomes a Qualifying Scheme for that employer.Firms affected by these changes will need to:• ensure compliance with the charge cap from 6 April 2015 onwards• remove consultancy charging from Qualifying Schemes by 6 April 2015• amend any differential charges on the basis of contribution status in Qualifying Schemes by 6 April 2016• remove commission and the remaining banned remuneration payments, including all other mechanisms formembers paying for services they have not initiated, from Qualifying Schemes by 6 April 2016.

Auto enrolment: Charge cap rules finalised and published by regulator

Related items

News from Twitter