“This is the wrong time to move to universal pension charging,” she said. “Doing so could do serious damage to the pensions market, which is currently vibrant and competitive offering a range of propositions and employer choice with bespoke charging.”
Smith warned that universal charging could encourage a race to the bottom on charges and even force some schemes to wind up.
Former pensions minister and LCP partner Sir Steve Webb warned that for the master trusts populated by millions of members with small pension pots, the revenue from a fixed percentage charge may not cover their costs.
“The DWP should prioritise resolving the ‘small pots’ issue first, and it would then have a much stronger case for standardising charging structures,” he said.
A DWP spokesperson said: “We are considering the views expressed in the universal charging structure element of the permitted charges consultation responses, and other evidence and will respond formally in due course.”
Alex Janiaud is deputy editor at FTAdviser's sister publication Pensions Expert
