Permitted Charges within Defined Contribution Pension Schemes

Overview

In the Review of the Default Fund Charge Cap published on 13 January 2021, the Government set out its intention to introduce a de minimis - below which the flat fee element of the combination charge used by pension providers, cannot be charged to members. We have drafted the secondary legislation required to bring about this change and we are consulting on this to better understand the impact of the de minimis on members and industry.

The Government also made a commitment to look at the standardisation of cost and charges within the DC pension industry. Through this consultation we will gather evidence to firm up our policy in this area, in order to consult on a final proposal, at a later date.

We are seeking your views on the following two measures outlined in the consultation:

1. The introduction of a de minimis on the flat fee element of the combination charging structure, including the draft statutory instrument to implement this change.
2. The proposal to move to a single, permitted universal charging structure for use within the default fund of qualifying Defined Contribution pension schemes used for automatic enrolment.

Read the consultation here

Why your views matter

In the consultation document, the government describes its proposals for the De minimis and the future reform of permitted charging structures. We are seeking comments from anyone who is interested. This is in order to help  finalise the policy on the De minimis and further develop our policy position on the permitted charging structure.

This survey is made up of 19 questions on the topics we would like to hear your views on.

What happens next

The Department will read and analyse the responses received. The government's response to the consultation will be published within twelve weeks of its closure.