Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • Sections
  • News

UK government to review pension charge cap

Open-access content Wednesday 27th October 2021 — updated 9.11am, Thursday 28th October 2021
UK government to review pension charge cap

The UK government will consult on changes to the regulatory charge cap for pension schemes in an effort to unlock investment in innovative businesses, chancellor Rishi Sunak has announced.

The pension charge cap of 0.75% is designed to keep costs down for savers in default arrangements within defined contribution (DC) pension schemes.

However, it has been criticised for being too restrictive by some in the pension industry, preventing schemes from investing in alternative investments, including venture capital and illiquid assets.

Today's Autumn Budget outlines how the the government will “consider options to amend the scope so that the cap can better accommodate well-designed performance fees” to ensure savers benefit from higher returns, while unlocking institutional investment in innovative firms.

Ministers will also continue wider policy work “to understand and remove various barriers to illiquid investment”.

The Department for Work and Pensions opened a separate consultation earlier this year on whether the charge cap prevents pension schemes from investing in a range of alternatives.

And in letter to investors in August, prime minister Boris Johnson urged institutional investors to “seize the moment” and create an investment “big bang” by funnelling a greater proportion of their capital towards long-term UK assets – from pioneering firms to infrastructure.

He argued that UK institutional investors are under-represented in owning British assets, with over 80% of DC pension funds’ investments in mostly listed securities, which represent just 20% of the UK’s assets.

However, the Pensions and Lifetime Savings Association's director of policy and advocacy, Nigel Peaple, said today that most schemes operate well within the 0.75% cap, averaging at 0.48%.

He continued: “The government has already introduced some changes to the charge cap which came into force earlier this month. We would rather the government allowed some time to see what effect these recent changes have before consulting on further amendments. 

“The pensions industry is very open to investing in illiquid assets, such as infrastructure, provided they match the needs of pension scheme members and have the right investment characteristics, but this is a complex area, and we do not think the current charge cap is blocking such investments.”

The consultation is expected to take place before the end of the year.

 

Image credit: Ilyas-Tayfun-Salci / Shutterstock

Author: Chris Seekings

You may also be interested in...

UK pension funds driving more CO2 emissions than most countries

UK pension funds driving more CO2 emissions than most countries

The UK's pensions industry would find itself in the top 20 national carbon emitters if it were a country, according to analysis by the Make My Money Matter campaign.
Wednesday 27th October 2021
Open-access content
UK government outlines new sustainability disclosure rules

UK government outlines new sustainability disclosure rules

Pension schemes and asset managers will have to start disclosing their environmental impact under new reporting rules outlined by the UK government this week.
Wednesday 20th October 2021
Open-access content
web_p24-25_Going-Dutch_CREDIT_iStock-1161143392.jpg

Going Dutch: What are variable DC pensions?

Oliver Warren and Mark Irwin explain the important future role of variable defined contribution pensions in the Netherlands, and their potential application elsewhere
Wednesday 3rd November 2021
Open-access content
web_p28_Time-to-bulk-up_CREDIT_shutterstock_796287874.jpg

What’s driving bulk annuity transactions in pensions?

Andrea Collins explores the rapid development of the UK bulk annuity market for pension schemes – and speculates on its future evolution
Wednesday 3rd November 2021
Open-access content
web_p30-31_An-old-age-problem_CREDIT_Benjamin-Baxter_Iko

An old age problem

As their populations age, developing countries will face issues over the sustainability and adequacy of their pensions, says Seda Peksevim
Wednesday 3rd November 2021
Open-access content
web_p32-34_Direction-of-travel_CREDIT_GettyImages-1248947593.jpg

Direction of travel for defined benefit schemes

Those running defined benefit schemes need to determine their end-goals – and how they will get there, says Costas Yiasoumi
Wednesday 3rd November 2021
Open-access content

Latest from Pensions

ers

By halves

Reducing the pensions gap between men and women is a work in progress – and there’s still a long way to go, with women retiring on 50% less than men, says Alexandra Miles
Thursday 2nd March 2023
Open-access content
rdth

Make My Money Matter's Tony Burdon on the practical power of sustainable pensions

Years working in international development showed Tony Burdon, head of Make My Money Matter, that sustainable pensions can harness trillions of pounds to build a better world – at a scale governments and charities can’t. He talks to Travis Elsum
Wednesday 1st March 2023
Open-access content
KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content

Latest from Investment

KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content
cj

Natural capital investing

Chris Howells and Andrew Dreaneen discuss how today’s investments in natural capital profit portfolios as well as the planet and humanity
Wednesday 1st February 2023
Open-access content
t

Options open on making portfolios more climate-friendly

Michael Sher sets out the option savailable to investors who are looking to improve their portfolios’ climate credentials
Wednesday 2nd November 2022
Open-access content

Latest from News

tf

New online forum 'IFoA communities' – now live

IFoA communities is your new online digital community. Here’s how to get started on the platform
Thursday 2nd March 2023
Open-access content
uh

Climate risk course sees new growth

In April, the Climate Risk and Sustainability course will be one year old. During its first year, we welcomed 155 participants and awarded 148 certificates. Members from more than 19 countries came together at the seminars to discuss and share what they had learnt.
Wednesday 1st March 2023
Open-access content
uh

Actuarial Profession Standard Z1: have your say

The IFoA is consulting on proposals to introduce a revised Actuarial Profession Standard (APS) Z1 on ‘Duties and responsibilities of members undertaking work in relation to UK trust-based pre-paid funeral plans’. APS Z1 sets out specific ethical and professional obligations that apply, in addition to the Actuaries’ Code, for members providing advice relating to funeral plan trusts.
Wednesday 1st March 2023
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Investment Consultant

Scotland / Scotland, Edinburgh / London, England
Up to £70000.00 per annum
Reference
148689

Market Risk Capital Actuary/Quant

London (Central)
£65,000 - £115,000 plus bonus and package
Reference
148688

Experience Analysis Contractor

England
Negotiable
Reference
148687
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ