Hundreds of thousands of people will benefit from new rules outlined by the Department for Work and Pensions (DWP) this week which includes the introduction of a threshold where pensions providers will no longer be able to charge a flat fee to savers.
In a bid to protect hard-earned savings, the rules mean pension savings invested in the default funds of schemes used for Automatic Enrolment with a value of £100 or less will be exempt from paying flat fees from April next year.
Minister for Pensions, Guy Opperman, explained how successful Automatic Enrolment has been in getting more people to save for their future through a private pension with over 10 million employees paying into a workplace pension since 2012.
However he pointed out that it hasn’t been as beneficial for some employees, he said: “For some, particularly those who regularly take on short-term work and change jobs frequently, there is a greater chance that they will be automatically enrolled into new workplace pensions a number of times, building up a collection of deferred small pots.
“Removing flat fees on pension savings worth less than £100 will provide a boost to hundreds of thousands of people and help them enjoy the retirement they deserve.”
The introduction of the threshold - known as the ‘de minimis’ - will complement plans to introduce pensions dashboards, which will allow individuals to keep track of their small pension pots more easily, helping them to better plan for retirement.
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