During a reading of the Pensions Bill today (29 October), Mr Webb told the House of Commons that a consultation will launch tomorrow (30 October) to seek views from the industry on what the cap should include.
The cap would go further than recommendations made in the Office of Fair Trading’s recent probe into the defined contribution pension market, though Mr Webb had previously hinted the cap may be lower at 0.5 per cent.
Mr Webb said it was necessary to introduce a “tougher” cap than previously implemented for stakeholder pensions by the previous Labour government, saying the effects of accumulated charges made 1 per cent an “alarmingly high and gentle” figure.
The minister said: “We understand that there are difficulties in finding a comprehensive definition of charges, as we could cap the annual management charge and find that providers cunningly manage to get money back through some other disguised charge.”
