Which? supports calls from the Work and Pensions Committee today to remove the contribution cap and transfer limits as part of the new National Employment Savings Trust (NEST). We believe removing these restrictions will allow people to save more money into their pension and that they should be lifted as soon as possible.
We believe these restrictions not only cause additional administrative complexity but also will prevent people from consolidating their pension savings in one place. Anyone wanting to make contributions above the annual limit may struggle to find an appropriate pensions savings vehicle outside NEST and Which? research found that 52% of people would be put off saving more by the hassle of finding and opening a separate pension plan.
Commenting on pension charges:
The jury is still out on whether all pension schemes offered by insurance companies will offer a fair deal for consumers. We believe it is vital that the Government sets clearly defined quality requirements for all schemes used for auto-enrolment to offer value for money. Otherwise there is a risk of this falling into a gap between the FSA and the Pensions Regulator. Some insurance companies are levying “deferred member penalties” which can double charges when people change jobs. The FSA have said that “Consultancy charges” of up to 35% of an employee’s first year contributions can be deducted.