When the UK government announced plans to introduce a personal pension scheme for those in the UK without access to a quality employer pension scheme there was much applauds from all areas of business. Initially it was thought that fees would be kept to a competitive 0.3% per annum, which is well below the pension industry average, but it now emerges that a 2% initial charge will be introduced which is unlikely to go down well with those automatically enrolled into the scheme.

While there is no doubt that the introduction of the new government pension scheme will benefit many people in the long run there is concern that a 2% upfront charge is very much on the high side. The National Association of Pension Funds has requested that the government look again at the initial charge, the proceeds from which will be used to repay the government’s setup costs, although in reality the authorities are likely to need repayment of the setup costs as soon as possible.

While there may be some tweaks and changes to be made to the forthcoming pension scheme there is no doubt it is a step in the right direction with the UK facing a pension funding crisis in the longer term.

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