Pension charges cap shelved - FT.com Millions of workers saving for retirement in company pensions will not have protection from high or unfair fees after the government retreated from plans for a legal cap on pension charges. The government had intended to cap fees levied on funds used for automatically enrolled workers from April this year, including an outright ban on charges above 0.75 per cent. But the Financial Times learned this week that the government was shelving the reform this year following pressure from industry. Morten Nilsson, chief executive of Now Pensions, a pension provider, said: "This is bad news for savers, as high charges, or even moderately high charges, have a very large impact on final fund values." Capping the overall percentage of an individual's pension pot that can be lost to charges over the lifetime of the scheme would protect savers, but give providers flexibility in terms of what they offer and how their charges are structured. A outright ban on charges above 0.75 per cent was one option being considered by the government. It was also mulling a higher cap of 1 per cent, or a "comply or explain" model which allow charges higher than any cap, if they could be justified. The rollout of the reform was to have coincided with the automatic enrolment of staff into pension schemes at nearly 22,000 small and medium-sized employers. It was also to encompass a ban on active member discounts, where those who have left employment but not yet retired are charged higher fees than those still employed at the company offering the scheme. The Department of Work and Pensions said it was continuing with its consultation on the reforms: "This is an important and complex consultation which requires our proper consideration to ensure we get it right. We will confirm a publication date in due course. Industry experts, who had criticised the government for rushing through its pension charge policy, said it was right for the cap to be delayed. "The Department of Work and Pensions now needs to reflect and deliver fundamental reform of pension charges," said Darren Philip, head of policy with The People's Pension, another provider. We need full transparency and, most importantly, charges need to be standardised. We urge the government not to put this into the "too-difficult" box." When plans for the cap were unveiled in October last year, the government said they marked the latest step in its commitment to reduce the cost of living. It estimated that a 0.5 per cent reduction in charges could boost a pension pot at retirement by up to £66,000.