Richard Lloyd, Which? executive director said
“This is a big win for millions of consumers with auto-enrolment pension schemes. It is absolutely right to ban these unnecessary and unfair charges that meant people’s retirement savings were going straight into consultants’ pockets rather than pension pots.”
Notes to Editors
Which? highlighted the issue of high and unfair pension consultancy charges to the Work and Pensions Select Committee in January 2013, and we wrote to the Department of Work and Pensions, the Financial Conduct Authority and the Pensions Regulator calling for a ban on consultancy charges for all pension schemes.
We highlighted the issue in Which? magazine in April 2013 when we posed as a consultant and approached five insurance companies to set up a pension for an employer. Our research revealed the risk of high levels of consultancy charging which could mean low to middle income earners have to contribute four, five or even six years before seeing any return. We found that:
– In the worst cases, two insurers did not object to charges that could reduce your first year’s savings by almost 50%.
– Someone contributing £100 a month would see their first year’s saving reduced to just £795.
– Another did not object to a fee of £450, plus 7.5% of all contributions for the first five years, leaving you with just £660 in the first year.
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