Pensions: Fees and Charges

(asked on 11th March 2022) - View Source

Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what assessment she has made of the proportion of infrastructure funds whose fees cannot be accommodated within the existing consumer price cap on pensions.


Answered by
Guy Opperman Portrait
Guy Opperman
Parliamentary Under-Secretary (Department for Transport)
This question was answered on 16th March 2022

The charge cap has been and continues to be successful in achieving its objective to protect members from poor value for money charges. In 2020, I committed to the continued existence of the charge cap.

At the same time, I am determined to make it easier for pension schemes to invest in illiquid assets and get better outcomes for savers. The Pension Charges Survey 2020 showed that two thirds of defined contribution schemes had zero direct investments in illiquid assets – which include infrastructure and green energy projects and venture capital investments which have the potential to achieve long-term benefits to savers. The survey also highlighted that when it came to diversifying the investment portfolio the performance fees that often form part of many of the opportunities within illiquid asset classes were seen as one of the barriers.

In November 2021, I launched a consultation entitled ‘Enabling investment in productive finance’ to explore whether the removal of well-designed performance fees from the regulatory charge cap would improve member outcomes in the long-term by making it easier to pay such fees when investing in illiquid assets. A fundamental part of this is also ensuring trustees can exercise their fiduciary duty and protect members from high and unfair charges. There is no compulsion to pay performance fees but if trustees believe that there is an opportunity to improve member outcomes, we do not want to hold them back from seizing this.

We received 54 responses to the consultation from pension schemes, asset managers, consumer rights groups and others on the impact our proposal would have on member protection and in helping to deliver better outcomes for pension savers. This included evidence of the impact any changes would have.

We aim to publish a summary of the input and the views we received, as well as the Government’s proposed next steps in the coming weeks as part of a wider set of proposals and reform that the Government plans to bring forward to help pension scheme trustees access as wide a range of assets as possible.

Reticulating Splines