Helen Forrest: Will the government’s proposed 0.75% pension charges cap be enough?

Nearly 10 million people will be saving into a pension scheme by the end of this decade, many of them for the first time.

Pensions can be complex, so it is important that members can be confident that their pension offers value for money. That is why the National Association of Pension Funds (NAPF) has been working to promote an industry benchmark for good quality pensions through our Pensions Quality Mark standard.

Charges have been falling and the average charge now stands as low as 0.51%. We welcome the fact that the government and the industry are talking about the need for pensions to offer savers value for money, but costs and charges are just one element of this.

It is important that employees know what they are paying and the NAPF has been leading the way on this by developing an industry-led charges code. It is equally important for charges to be seen in a wider context that includes the quality of services provided to savers through their working life and a robust investment strategy that generates good returns.

We are concerned that the charges cap could be a rather blunt tool. Pensions will change rapidly over the next few years and we feel that a cap could stifle innovation, which may make it difficult for schemes to provide the services that savers need.

Ultimately, the NAPF believes that transparency, good governance and scale are the key drivers of good outcomes for scheme members. The government should focus on ensuring that these elements are delivered so that pension schemes can secure the best deal for their members, provide the most appropriate services for them and maximise members’ opportunity of securing an adequate income in retirement.

Helen Forrest is head of policy and advocacy at the National Association of Pension Funds