We have published rules to implement a charge cap on default funds for automatic enrolment and bans on certain charging practices in workplace personal pension schemes we regulate. Similar measures will be implemented by the Department for Work and Pensions (DWP) in regulations for occupational schemes for which The Pensions Regulator (TPR) will be responsible.
Why are we publishing this paper?
In October 2014 we consulted on our proposed rules. These require firms that operate workplace personal pension schemes used for automatic enrolment to implement a charge cap within the default funds of those schemes. They also prevent providers from using differential charges based on contribution status and from paying commission and other banned remuneration to advisers for services not initiated by scheme members in workplace personal pension schemes.
This Policy Statement summarises the responses to our consultation, provides our response to the feedback and publishes the final rules.
These rules form part of a package of measures aimed at improving governance and value for money in workplace pension schemes.
Who does this Policy Statement affect?
This Policy Statement will be of interest to:
- firms operating workplace personal pension schemes
- employers and their advisers in relation to the selection and ongoing monitoring of workplace personal pension schemes
- fund managers and other third parties providing services to firms operating workplace personal pension schemes
- consumers who are members of workplace personal pension schemes and consumer groups seeking better value for money for consumers with workplace personal pensions
What are the next steps?
The charge cap will apply from 6 April 2015 or the date from which a scheme becomes a Qualifying Scheme for an 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 for members paying for services they have not initiated, from Qualifying Schemes by 6 April 2016
Find out more:
- FCA Handbook[2]
- CP 14/24: Charges in workplace personal pension schemes[3]
- Better workplace pensions[4]
- Pensions Schemes Bill 2014-15[5]