December 9 2013.

The government is proposing reforms to reduce the charges on pension schemes used for auto-enrolment. It is expected that up to 9m people will open new pensions as part of the scheme, increasing the amount being saved in workplace pensions by around £11bn a year.

While the average charge on new pension schemes is around 0.51 per cent, the Office of Fair Trading estimates that there are over 186,000 pension pots with £2.65bn assets that are subject to an annual charge of above one per cent..

If lower rates were instituted the government believes that individuals could receive larger pensions – an additional £66,000 at retirement with a one per cent charge, and an extra £100,000 with a 0.75 per cent charge, compared to a 1.5 per cent charge.

The Department for Work and Pensions is asking for comments on a number of options. Click HERE for further information.