Which? response to Government’s announcement on pension charge cap

Which? executive director, Richard Lloyd, said: 

“The 0.75 per cent cap on pension charges is welcome news for the millions of consumers currently paying into rip-off pension schemes who will now be thousands of pounds better off in their retirement.  

“Following the Budget reforms people may invest in their pension schemes for longer, so it’s all the more important that charges are as low as possible. While we’re pleased that the Government intends to do more to bear down on other costs in the coming years, we want the cap level kept under review to see if it can be lower in future to help savers get the best value out of their hard earned money.” 


  • Paying a 0.75% annual charge instead of 0.5% could cost a person saving throughout their working life £40,000.
  • The Government should commit to regular future reviews of the cap to see if it can be set any lower, and providers must be required to demonstrate that they are genuinely offering added value for their higher charging schemes.

Individual benefits to consumers of setting the charge cap at various levels

Calculations based on individual A and B each putting aside £100 a month with contributions increasing by 4% a year.

  Existing Annual Management Charge  Total lost in charges Potential benefit of a 0.75% charge cap Potential benefit of a 0.5% cap
Individual A

Saves throughout their working life (46 contribution years)

0.5%  £91,800 £0 £0 
0.75%  £132,300 £0 £40,500
1%  £169,700 £37,400 £77,900
1.25%  £204,200 £71,900 £112,400
1.5%  £236,000 £103,700 £144,200
Individual B

Saves from age 45 until State Pension age (22 contribution  years)

0.5%  £5,400 £0 £0
0.75%  £7,900 £0 £2,500
1%  £10,400 £2,500 £5,000
1.25%  £12,700 £4,800 £7,300
1.5%  £15,000 £7,100 £9,600