Martin Lewis ‘concerned’ as Rishi Sunak announces pension charge cap change

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Budget 2021: Sunak reveals changes to pension charge caps

Speaking during his 2021 Autumn Budget and Spending Review today, Mr Sunak said: “Innovation comes from the imagination, drive and risk-taking of business. It’s why I’m announcing today, we will consult on further changes to the regulatory charge cap for pension schemes, unlocking institutional investment while protecting savers.”

However, the announcement has sparked some concerns from observers such as Martin Lewis, the Money Saving Expert, who took to Twitter to voice his worries over the future of pension fund charges.

He said: “Slightly concerned about glib ‘regulatory unlock for pension charge cap’ i.e., increasing the charges cap so funds can charge more. This can be positive, as it allows a wider choice, but must not be allowed to push up the norm for charges for simple funds.”

Former Pensions Minister, Sir Steve Webb tweeted: “Relaxing pension charge cap to encourage illiquid investments is really missing the point – most schemes are well below the charge cap and barriers to investment are not primarily about charges.”

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown said: “We welcome the consultation on reform of the DC charge cap announced in today’s Budget. While introduced to safeguard value for scheme members we know that cost is only one determinant of value. There will be appetite to invest in more illiquid assets, especially if it aligns with people’s values of a greener future and this would prove difficult with the charge cap in its current form. We await the full detail, but it will be interesting to see if this may also read across to charges on drawdown investment pathways.”

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