Legislation has been laid before Parliament to cap charges for people who are automatically enrolled in workplace pensions.
According to the DWP, it will mean that unless the employee opts for a more expensive option their charges will be capped at 0.75 per cent.
The DWP has estimated that an average earner currently paying into a fund with a charge of 1.5 per cent could save around £100,000 over the course of their working life.
Pensions minister Steve Webb said: “It is vital that workplace pension schemes are run in the interests of their members and that their hard-earned savings are not eaten away by excessive charges.
“Over 5m people have now been automatically enrolled into a workplace pension, and by 2018, millions more will be saving for the first time, or saving more.
“This is why we are building a pensions system that these workers can save into with confidence, and not see their money disappear in opaque charging structures.”
Charges relating to earmarking and pension sharing cases will be excluded from the cap, which will come into effect in April.
Adviser view
Carl Lamb, managing director of Norwich-based Almary Green, said: “It is commendable that this cap is being introduced, but if people want advice someone will have to pay for it.”
