The U.K. Department for Work and Pensions will investigate whether the charge cap on defined contribution default funds is appropriate and whether other fees should be included.
The government agency wants input from the DC industry as it re-examines the 0.75% charge cap on workplace DC default arrangements, which was introduced in 2015.
The DWP said Thursday that it will look into whether transaction costs and other fees associated with insurance-based products should be included in the cap and how plan participants are protected from excessive charges.
The government also wants to assess usage of cost disclosure templates, standardized reports outlining charges to DC participants, which were introduced by the Pensions and Lifetime Savings Association in 2018.
"The charge cap on DC pension schemes is an important consumer protection, ensuring savers receive better value for money from their pensions. (The) DWP's findings are consistent with our own: in practice most DC schemes' default funds operate well below the charge cap," Lizzy Holliday, head of DC, master trusts and lifetime savings at the PLSA, said in an email.
"We're pleased that (the) DWP recognizes the work the pension and investment industries have undertaken via the cost transparency initiative to establish and promote new industry standards for cost reporting," Ms. Holliday added. PLSA is U.K. retirement industry body representing over 1,300 plans with 20 million members and £1 trillion ($1.25 trillion) in assets.
The consultation is open for comment until Aug. 20.
