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Guide to Pension Charges



    The government has raised concerns about the costs associated with pension saving and has announced it will take action to clamp down on excessive charges on occupational pension schemes next year, when a charge cap will be imposed.

    But advisers reviewing pension pots today should always contemplate whether a client could be better off switching to a scheme with lesser charges.

    This guide will explain the current range of costs associated with retirement savings, what the government thinks about pension charges, what changes could happen, and how to calculate if your client could be better off switching schemes.

    Contributors to this guide were Steve Webb, pensions minister; Andrew Tully, pensions technical director of MGM Advantage; Mark Fawcett, chief investment officer of Nest; Morten Nilsson, chief executive of Now Pensions; Saq Hussain, head of PricewaterhouseCoopers defined contribution consulting team in the north; Tom McPhail, head of pensions research of Bristol-based Hargreaves Lansdown; and Ronnie Morgan, strategic market insight manager of Scottish Life.

    This guide is sponsored by Aviva. All editorial is independent.

    In this guide


    Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

    1. What is the lowest charge seen by Mr Hussain for an ‘unbundled’ scheme?

    2. How much would an individual paying an AMC of 0.5 per cent over a 46-year period of saving lose to pension charges, according to the DWP?

    3. And how much would an individual paying 1 per cent over the same period lose?

    4. Which of the following was NOT an option outlined by the government for workplace pension scheme charges?

    5. What could the pension charge cap cause, according to Mr McPhail?

    6. What has Standard Life done since the cap was announced to cover some of the perceived losses it will face?

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