.Since the announcement there has been growing speculation about where the charge cap will fall, with some suggesting the Government would simply replicate the 1 per cent stakeholder pensions cap.
However, speaking at the National Association of Pension Funds conference in Manchester yesterday, Webb indicated the Government was preparing to take a tougher stance.
He said: “We are going to produce a consultation document very shortly in light of the Office of Fair Trading report which will set out options for tackling the issue of excess charges.
“In a world where the Government has created a provider with a public service duty to provide pensions of the equivalent of 50 basis points, why should anybody be automatically enrolled and have their money invested by default into something that charges twice as much?
“In the old days we thought 1 per cent was progress, but are we really saying we can’t do better than we did 10 years ago when we don’t even need to sell the products?”
Speaking to Money Marketing, Webb said the Government will also seek views on how to cap charges for schemes with dual charging structures, such as Nest.
He said: “If you had a charge cap then you would have to ask what does that mean if you have a mixed charging structure, so that is something we will address in the consultation.
“The context is the OFT did not say we should go for a charge cap, so it would be very odd if another bit of Government piled in six weeks later and said we are going to set a charge cap and this is the level.
“Part of the consultation will be evidence gathering so we understand what we are doing and the consequences of what we are doing.”
PRAVEEN SHARMA
PGDM IST
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