Changes to The People’s Pension's charging structure have been delayed after a problem was encountered during testing.
The master trust provider – the second biggest one in the UK market after Nest – was expecting to move from its annual management charge of 0.5 per cent to a banded pricing structure in the summer.
However, a specific issue was encountered when adjusting contributions – if employers have over- or underpaid contributions – which the provider needs to resolve before implementing the changes.
Roy Porter, chief sales and marketing officer at The People’s Pension, said: “An issue surfaced during testing which we need to resolve before rolling this out to our 4.7m members.
“We have communicated to our customers that there’s a slight delay and we are working to get the benefit of lower rates to our members as soon as possible.”
The new pricing structure, announced by the provider in February, reduces the fee revenue which The People’s Pension receives from its membership’s annual management charge by 10 per cent.
The banded structure reduces fees as pot sizes grow, with the first band for savings between zero and £3,000 having a 0.5 per cent AMC, and the fifth band, for individuals with pensions worth more than £50,000, having a 0.2 per cent charge.
An average earner saving over their working life with the master trust could see their lifetime AMC fall by more than half to just 0.23 per cent, the provider said at the time.
According to calculations from The People’s Pension, this average earner could potentially increase their pension pot at retirement by almost £55,000, when compared with a lifetime fee set at the charge cap of 0.75 per cent; or almost £30,000, when compared with a lifetime fee set at the current AMC of 0.50 per cent.
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