Steve Webb has hinted at a maximum 0.5 per cent charge for auto-enrolled pensions to level the playing field with the National Employment Savings Trust.
Speaking at the NAPF conference on 17 October, the pensions minister questioned why any employee should be paying twice as much in a default fund when Nest charges the equivalent of 0.5 per cent.
He said: “Although 0.7 per cent or 0.8 per cent might sound low, another 10 basis points here or there makes a hell of a difference”.
He warned providers against “the tactic of squeezing a little slice here there and everywhere”, which resulted in “a lousy strategy and an industry with a terrible reputation”.
On consultancy charging, the minister said “people were ...having big chunks of the first year’s contribution taken away for advice they never got – it happened, so we had to ban it”.
On his controversial pot follows member proposals, the minister hinted that the government would not be setting up a big IT project, but would create some infrastructure, because fund transfers showed that “exchanging money from one place to another would not be rocket science”.
Mr Webb added that his department was working with a whole raft of sectors to avoid pensions liberation fraud becoming a future “scandal”.
But he said the creation of a new pensions regulator, advocated by the outgoing NAPF chairman Mark Hyde Harrison, was not on his agenda.