The Nation Newspaper

Category: Pension

  • Senate screens PenCom appointees

    The National Pension Commission (PenCom) may soon have a Board and substantive head, as the Senate Committee on Establishment and Public Service Matters headed by Dr. Alloysius Etok, rounded-off the screening of itsnominated chairman and commissioners last week.

    President Goodluck Jonathan had sought the Senate’s confirmation to appoint the former Governor, Adamu Mu’azu from Bauchi State as chairman of the Commission and ChineloAnohu-Amazu (Southeast), as Acting Director-General.

    Others are Omotowa Gilbert (Northcentral); Mohammed Abubakar (Northwest) and AdesojoOlaoba-Efuntayo (Southwest) as commissioners.

    Although it is unlikely that the Senate will confirm the nominees before they go on recess, the Commission is in high spirit that the nominees will be confirmed.

    The President in his letter to the Senate read at Plenary by Senate President David Mark, said the appointment is in accordance with Section 16 (3) and 17 (1) of Pension Reform Act, saying he expected that it would receive the usual kind of expeditious attention of the Senators.

    A source in the Commission who affirmed the development said the Senate Committee has screened the nominees and would soon recommend their confirmation.

    He said the Committee was expected to get back to the Senate and after the confirmation, the president would inaugurate the appointees before they can resume office noting this is likely by January next year.

     

  • ‘Cap on pension management fees too high’

    ‘Cap on pension management fees too high’

    A leading pensions’ provider has said a proposed cap on management fees is “too high.”

    Legal and General said a 0.75 percent cap on fees should be brought down to 0.5 per cent. It claims that the 0.5 per cent cap could cost consumers £4 billion over a lifetime of pensions saving.

    However, experts said if caps are set too low, the government risks “dumbing down” pensions and stifling innovation in the sector.

    The criticism comes on the same day the deadline for submissions by the pensions industry to the government.

    Legal and General appears to be out of line with the rest of the industry, who are against any cap on fees.

    Ministers argue the industry could be charging excessive amounts and want to curb management fees, however Steve Webb, the pensions minister, said pension providers could charge above the cap if they can prove to the regulator that the fees offer value for money.

    Mr Webb told BBC Radio Four’s Today programme that the aim of the cap was to get rid of extremely high charges but also to avoid driving charges so low that people can’t get a quality product.

    He said: “One option will be to say you have a cap that’s quite tough, and then you say if a particular provider wants to go above that, they have to explain to the regulator that people are getting value for money.”

    He added: “If we come up with a cap, it will be an absolute cap; it will be a legal limit. One option for example would be to set a cap at a level now and then perhaps glide it down over a number of years so that the industry year after year has to get more and more efficient.”

    Dr. Ros Altman, a pensions expert who has advised the government, warned against capping the fees so low that you “dumb down” pensions to the “lowest common denominator” and that very low fees could limit “innovation” in the sector.

    “We have to be careful not to get too obsessed with the level of charges and we have ad a lot of success in bringing down the charges on pensions across the industry.

    “Of course it’s better if you can pay less charge because more of the money stays in your pension fund.

    “We don’t equally want to dumb down pensions to the lowest common denominator; Legal and General are already offering pensions at around 0.5 per cent, so of course, from their perspective, recommending that everyone else should do the same makes business sense.

    • Culled from The Telegraph

  • PenCom establishes contact centre

    PenCom establishes contact centre

    The National Pension Commission (Pencom) has established the Contact Centre information network.

    This is in response to the need of pensioners and other stakeholders in the industry to get adequate information on their savings and operations of the commission.

    Pencom said the centre would provide the public with a means of contacting the Commission to lodge complaints or make enquiries about pensions.

    According to Emeka Onuora, Head, Communication Department of Pencom, the centre, which is a more improved method of handling complaints will offer the public the opportunity to relate with the Commission via telephone calls and e-mail without necessarily visiting Pencom offices.

    Though the Commission had previously engaged the use of telephones, e-mail, social media and letters to resolve issues raised by pensioners and the public in the past, it was not able to track the history of complaints or enquiries since such transactions could not be stored electronically.

    “Previously, the Commission has a decentralised process through which it deals with complaints and requests from the public. Requests from members of the public usually come in various ways, such as telephone calls, e-mails, social media and letters. The decentralised manner in which complaints are addressed resulted in pension contributors/retirees issues not been stored electronically. Consequently, this led to a difficulty in tracking and retrieving a history of previous complaints lodged by clients. The total customer satisfaction thus falls short of expectations leading to dissatisfied customers and the attendant negative perception about the services rendered by the Commission,” Pencom noted.

    But Onuora explained that the newly adopted call centre model has been designed to take care of the challenges of the past since it can store information electronically and as well track the history of transactions.

    He said agents have been made available to answer telephone calls and to promptly resolve the issues raised by the public as much as possible.  The Commission promised that the public would also get timely responses to the email messages sent to the centre.

    Onuora said the public could get access numbers for telephone and email address of the centre from the commission’s website.

    Pencom reiterated that the main aim of the centre is to take off the burden of visiting its offices by pensioners to get their concerns addressed.

    “It will also help the Commission to provide a more efficient service to the public”, Onuora added.

  • PFAs, life insurers bicker over retirees pension option

    PFAs, life insurers bicker over retirees pension option

    THE end may not be in sight yet to the furore between Pension Fund Administrators (PFAs) and insurance operators over de-marketing of the two retirement options available to retirees for drawing pension benefits.

    The products, which are under the Contributory Pension Scheme as contained in the Pension Reform Act (PRA) 2004, are Programme Withdrawal offered by the PFAs and Life Annuity by life insurance firms.

    Investigations reveal that the crisis between the PFAs and life insurers over which product a retiree should choose have continued to grow as they trade blame on de-marketing while employers are getting worried following feedbacks from their retirees.

    The life insurers believe PFAs have advantage over them as the fund is under their control and they do everything possible to make sure they keep the money and keep them away from the retirees.They alleged that PFAs also de-market annuity and force retirees to choose Programme Withdrawal in its stead.

    The PFAs have, however, denied the allegation, saying insurers are getting agitated unnecessarily.

    The PRA provides that an employee can, on retirement, make withdrawals from his Retirement Savings Account (RSA) in the form of a programmed monthly or quarterly withdrawal based on his life expectancy or buy life annuity from a life insurance company.

    The section says; “A worker with a RSA can access the money upon retirement or at 50, by opting for programmed withdrawal, which is provided by the PFAs, or annuity, which is provided by the insurance companies.”

    According to the Act, programmed withdrawal is an option that is calculated on an expected life span; meaning that the pensioner will be paid regularly for some years after which he ceases to earn income from his PFA.

    Also, the Act specifies that the annuity will be paid on a regularly by the insurance firm to the pensioner until he dies.

    Section 1.2.9 of Regulation on Administration of Retirement Terminal Benefits issued by the PenCom provides that a PFA shall not impose, coerce or influence a retiree on the choice or mode of withdrawal.

    However, regulation on annuity under Section 4.1 b of the PRA is jointly issued by National Insurance Commission (NA1COM) and the National Pension Commission (PenCom) for giving effect to the provisions of the PRA.

    According to laws on annuity, it is the responsibility of NAICOM to regulate the annuity market while it is that of PenCom to ensure that a retiree receives his/her retirement benefit promptly.

    Meanwhile, some employers have told The Nation that it has received complaints from its retirees and insurers, seeking help from them on how they could assist in making PFAs to release funds of retirees who have chosen life annuity.

    They said they have observed the rift and are worried.

    An employer said it got reports that some PFAs refused to release funds of some its retirees to life insurers after all processes have been completed.

    He explained that they, on their part issue retirement bond to retirees immediately after retirement.

    “We got a complaint from an insurance company that a particular PFA has refused to transfer a retiree’s pension fund who opted for annuity.

    “They asked for our assistance, but we told them that there is nothing we can do on our part and directed them to the regulatory authority,” the employer said.

    A retiree in the private sector said the PFA and insurers need to be matured in the way they market the products, adding that he was more confused after listening to both parties on which product to choose.

    A senior official in PenCom said the problem is an issue of mis-selling of the two products by the two parties.

    He said it was baseless for a PFA to think because he had kept the fund to a level where the employee retires, the fund must remain with them.

    He affirmed that there are excesses between the two, noting that the Commission has told them there is no need for quarelling.

    He said they expected the PFAs and insurers to be courteous in marketing the products, adding that PenCom and NAICOM have intensified efforts to ensure the laws governing the regulation on annuity as jointly issued is not disregarded.

    He said: “Whatever the PFA and insurer does in marketing the products, the decision is made by the account holder who has a right to choose what he or she would prefer as its pension options.

    “We have collaborated with NAICOM to curtail the excesses of the two. We have also embarked on enlightening and creating awareness among retirees on their rights as account holders. We told the retirees to always report to us when they feel something is not right.

    ”The issue is not for them to be at war with each other, but to sell their products without running down the other”

    Chairman, Pension Fund Operators Association of Nigeria (PenOp), Mr. Misbahu Umar Yola, said he does not believe the PFAs are deliberately holding on to pension funds of retirees who opt for annuity.

    He further said he does not think it is an issue of de-marketing annuity products as all they do is explain to retirees the advantages and disadvantages of the products.

    According to him, there may be a few bad eggs, but it is not peculiar to most PFAs in the industry.

    He said: “I do not think any PFA will compel retirees to purchase programme withdrawal or deliberately hold their fund back. Sometimes there could be delay between the period when the PFA writes to PenCom for approval to release the fund and this does not take more than two weeks.

    “There could be an incident, but this does not make it an industry problem. There are 20 PFAs and we receive thousands of applications and it is possible there could be certain issues with few of them that need to be addressed by either the retiree or the PFA before transfer of fund can be done.”

    Vice Chairman, Nigeria Insurers Association (NIA) and Managing Director, Linkage Assurance, Mr. Gus Wiggle, said there was no basis for PFA not to release a retiree’s fund to insurers.

    He added that the choice of the pensioner should be respected by the PFA.

    “I believe PenCom is doing a good job and they will come down hard on any PFA found to disregard the law. The PFA job terminates when the employee retires and their choice in choosing a retirement option should be respected,” he said.

  • Nigeria has got a lot better, says South African agribusiness entrepreneur

    Cassava, a woody shrub with an edible root that looks like a large sweet potato, is one of the most widely grown crops in Nigeria, produced largely by small-scale farmers. Although cassava roots can be processed into a variety of products – including cassava flour, starch, ethanol and glucose syrup – the crop has not been a great commercial success.

    A South African-born businessman is, however, at the forefront of commercialising cassava in Nigeria. Louw Burger is the man behind Thai Farm International, a 90-ton a day cassava processing company, located 120km from the country’s commercial hub of Lagos. The plant turns cassava into flour, although the company is looking to move a step up the value chain by producing starch. In 2012, Flour Mills of Nigeria, a Nigerian Stock Exchange (NSE) listed company and one of the country’s largest wheat millers, bought a controlling stake in Thai Farm.But why would a wheat milling company all of a sudden be interested in cassava? Well, they don’t really have choice.To reduce dependency on imported food and to boost Nigeria’s agricultural sector, the government has issued a directive that requires bakers to add a certain percentage of high-quality cassava flour into their mixes. Cassava flour is also much cheaper than wheat flour.Burger spent his early career in banking, first with Citibank in South Africa, and then looking after South African lender Absa’s business in Asia for many years. He came to Nigeria a decade ago, on what was supposed to be a brief stay to turn around a struggling business owned by one of his Asian friends. After this he took on an assignment at a local Nigerian bank. It was during this time that he met and married his current wife, a Thai businesswoman running a trading company in Nigeria.When his work at the bank was done, Burger needed something to do. He looked at a few options, until someone suggested to him to get into the cassava business.”I had never heard of cassava, but Thailand is the world’s largest exporter of starches made from cassava. We went to Thailand a lot anyway, so we went back and saw that in Thailand, starch from cassava is a US$5billion a year industry. In Nigeria cassava is an indigenous plant and very widely cultivated, mainly on a peasant farming basis. It is like bringing a factory into a country that already cultivates a massive quantity of the stuff. So these elements all came together, and we started the project,” he explained to How we made it in Africa.The concept was birthed to bring Thai cassava farming and processing technology to Nigeria to increase the production and processing of cassava roots.

    Burger says that although reliable numbers are scarce, there are probably around five industrial scale cassava processing companies throughout Nigeria, existing alongside numerous smaller producers and backyard operations.Thai Farm sources the majority of its cassava from commercial farmers in the central part of the country. It used to get most of its crops from smallholder farmers, but these days, due to a steep rise in food prices, farmers prefer to sell their crops to local women entrepreneurs who use the cassava to produce an indigenous food called garri. “The garri buyers are paying silly numbers because the price of their food has gone up by 250 per cent,” Burger noted. Thai Farm has, however, started investing money in its own farming operations.

    Despite Thai Farm’s success, Burger said there are many challenges of operating in Nigeria.

    One of his headaches is finding suitable people to work at the factory. Cassava factories need to be situated close to the farms due to the crop’s short shelf life. After it has been taken out of the ground, cassava needs to ideally be processed within 48 hours before it goes bad. This means that once the crops come in, the factory often needs to operate 24 hours a day.

    “Finding people in these villages that actually have an education, that actually have a work ethic, that can apply themselves, that have a place to sleep during the day, so that when they are on night shift they have rested during the day – these are all major challenges,” Burger explained.

    Transport is also a challenge. “Transport in Nigeria is hellishly expensive, and typically run by small companies – one, two, three truck people that are not that reliable. With the unreliable transporters, you’ve got bad roads, you’ve got harassment by government officials on the roads. This afternoon I counted my permits that I carry with me in my vehicle – 48 different documents. And then they stop you on the road, and they count your documents, and they say, you don’t have this paper, and that paper, and they try and squeeze money out of you by selling you another permit.”

    Despite these troubles, Burger believes Nigeria’s business environment has improved considerably over the past decade. “I’ve seen a vast, vast improvement in ten years. I mean 10 years ago if you went out on a Sunday, you got stopped at a police roadblock with the policeman literally putting a gun to your head and demanding your vehicle papers to try and intimidate you into giving him money. Now that doesn’t happen anymore. It has improved a lot. I mean in the last six months I’ve driven 30,000km on the roads across southwestern Nigeria – and they’ve started putting money into fixing up the roads. There are still vast areas where the roads are still really, really bad – but the roads have gotten better.”

    Burger is also encouraged by the fact corruption is a daily debate in the press. “It is openly talked about, and openly condemned.”

    “I think Nigerians have reached the bottom of the pit, they’ve been through the deepest, deepest dark dip, and they saw what happened to their lives and they said, ‘hell no, we don’t want this’. It remains a challenging environment, but I’m of the opinion, that in the ten years that I’ve been here, it has gotten a lot better. If they continue on the path that they are on now – this is not going to be a bad place to be in another five to ten years’ time,” he said.

     

    •Culled from How we made it in Africa

  • Tax cut offers workers £11,000 pension boost

    Tax cut offers workers £11,000 pension boost

    A tax cut for City fund managers will leave the typical worker £11,000 better off on retirement, the Treasury has said.

    Treasury minister, Sajid Javid, told MPs that the impact of the tax cut has now been independently assessed by the Government Actuary’s Department

    The Treasury has promised to abolish “Schedule 19” stamp duty reserve tax, which applies to some investments sold by funds.

    The tax cut, worth £145 million a year to the fund management industry, is politically controversial and Labour has promised to reverse it.

    SajidJavid, a Treasury minister, told MPs that the impact of the tax cut has been independently assessed by the Government Actuary’s Department.

    The actuaries calculated that a typical 22-year-old currently earning the average weekly wage and investing the equivalent of 10 per cent of their earnings in a pension over their career “would see a fund value £11,200 greater at retirement as a result of these changes,” he said.

    This is equivalent to approximately a 1.3 per cent increase that worker’s total fund at retirement, Mr Javid said.

    Ed Miliband, the Labour leader, in September suggested that Labour would reinstate the tax, describing the Coalition move as a “tax cut on hedge funds”.

    Labour has said it would use the money raised to reverse Coalition cuts in housing benefit for people with spare rooms in social housing, dubbed the “bedroom tax” by critics.

    Mr Javid said the actuaries’ figures showed that the tax cut was in Britian’s best interests and should not be reversed.

    “Abolishing Schedule 19 will make UK based funds more competitive, create jobs and improve returns for investors. The government reforms will also mean that ordinary savers could be over £11,000 better off when they retire,” he said.

    “Schedule 19 is a major deterrent to foreign investment funds moving to the UK. Labour’s plans to reinstate the tax would rule out real benefits for hardworking families and could cost thousands of jobs across the UK.”

    Separately David Gauke, a treasury minister, has said that that the tax cut would boost employment, arguing that asset management funds would flock to the UK to set up businesses.

    In a response to a written question in the Commons’ Mr Gauke said that the asset management industry already directly employed 32,300 people in the UK.

    Edinburgh, he said, has 3,300 people employed in the industry, Coventry 1,200. A further 900 people work for asset managers in Reigate and 500 in Liverpool.

    He said that there were “tens of thousands” more people whose jobs are indirectly reliant on the sector.

    He said: “Many of these jobs are created by funds which are set up in the UK. The abolition of this tax will encourage more funds to be set up here, thereby safeguarding existing jobs and equipping the UK to compete more effectively in the global race for growth.”

    Daniel Godfrey, head of the Investment Management Association, said that the changes would put the UK on a more even footing with other European countries such as Luxembourg and Dublin. He added that it was a world class opportunity.

    • Culled from The Telegraph

  • Pension business’ll soar, says IGI Pension boss

    Pension business’ll soar, says IGI Pension boss

    The industry will boom when the regulatory body, the National Pension Commission (PenCom) releases the guidelines on the informal sector under the Contributory Pension Scheme (CPS), the Managing Director of IGI Pension Managers, Stanis Ezeobihas has said.

    Ezeobi said according to statistics, there are about 51 million working people in Nigeria with only 5.6 million registered in the CPS.

    He said that despite the N3.73 trillion pension funds generated through the contribution of the 5.6 million people, about 45 million people were yet to register, showing that a huge market still exists in the industry.

    He said: ”The market frontier is the informal market going by available statistics, although there are challenges and costs that go with getting the informal sector on board. It is more expensive to cover than the formal sector.

    “The informal sector consists of artisans, Okada association, Drivers Union and market women associations among others and reaching these people can be difficult,” he said.

    Ezeobi said to reach and register these groups of people, pension managers have to come together with a common goal to achieve results.

    He said for IGI Pension, the company is repositioning to key-into the prospects of the sector, adding that it has recapitalised to over N1.2 billion, more than the N1 billion recapitalisation required by the regulatory body.

    “On our own part, we are strategising at using the parent company, IGI Insurance Plc platform which has a broad agency network to penetrate the informal sector and get a significant share of the market.

    “We are the last to be licensed by PenCom since the new scheme began, but we have been able to grow and surmount all of our challenges. What we are waiting for now is for PenCom to release the guideline on the informal sector,” he said.

    The Acting Director-General of (PenCom), Mrs. ChineloAnohu-Amazu said the framework on informal sector participation is been put in place by the commission, noting that the market is huge and untapped.

    She stated the policy issues such as contribution rate, mode of collection and enforcement have been addressed by the framework. She, however, noted that the informal sector and self-employed persons lack a coherent structure and have an unwieldy composition, which renders their integration into the new scheme a difficult task.

    She added that compliance among the small sized private sector employers is challenging in the implementation of the CPS as they see CPS as additional cost to their operations.

     

  • CPS: Pencom generates N3.73tr

    CPS: Pencom generates N3.73tr

    NATIONAL Pension Commission’s (PenCom) N3.73 trillion assets generated under the Contributory Pension Scheme (CPS) and registration of over 5.8 million members have deepened the financial sector, its Acting Director-General, Mrs Chinelo Anohu-Amazu has said.

    Mrs Anohu-Amazu, who spoke while showcasing the success of the CPS introduced in 2004 to delegates from 40 countries at the World Pension Summit in Amsterdam, Netherlands, said the assets have grown from a deficit of N2.6 trillion prior to its inception in 2004 to N3.73 trillion in the nine years of the existence of the Scheme.

    She told the delegates that the CPS is sustainable, funded and privately managed by operators licensed by PenCom, adding that the legal and institutional frameworks established by the Commission which are responsible for the success so far recorded, have also provided a platform for the provision of infrastructure and the development of the real sector, thereby reinforcing the transformation agenda of President Goodluck Ebele Jonathan.

    The World Pension Summit is a yearly event dedicated to on-going advanced learning for senior pension professionals. It also offers comparative analysis of pension experiences in participating countries, as well as provide insight into the impact of emerging trends on pension arrangements and ample room for peer-to-peer discussion among delegates.

    It brought together over 350 professionals, experts and key authorities in the field of retirement solutions management with specific focus on pension fund strategies, social security and employee benefits.

    The theme of the summit centered on pension investment, risk management, pillars for pension scheme administration, communication and information management and strategies for stimulating growth in pension portfolios.

    The Acting DG led a delegation comprising Mrs. Grace Usoro, the General Manager/Head Public Sector Pensions Department and Ms. Olusola Odufuwa, Head Corporate Counselling Unit of the PenCom.

    Other speakers included Prof Zhen Li, Director of the Institute for Social Security Study, School of Public Administration, China Renmin University; Yves Leterme, Deputy Secretary-General of the OECD, Paris, William De Vijlder, Vice – Chairman of BNP Paribas Investment Partners, Brussels.

    Others were Gerard Riemen, Managing Director, Federation of the Dutch Pension Funds, the Hague, Gareth Gibbins, Steve Webb, Minister of State for Pensions, United Kingdom, Elsa Fornero, former Minister of Labour, Social Policies and Equal Opportunities, Italy, Nancy Heller, Senior Managing Director, Globalisation, TIAA-CREF of the United States and AnnamariaLusardi, Academic Director, Global Financial Literacy Excellence Centre.

  • Lloyds union prepares strike ballot over cuts to final salary pensions

    Union chiefs warn proposals for a new cap on the defined benefit savings pots of 35,000 employees is the ‘last straw’

    Union chiefs accused Lloyds Bank of mounting a “relentless attack” on staff benefits as workers threatened to strike over the loss of final salary pension perks.

    Some 35,000 employees, a third of the workforce, have been told their pensionable pay will be frozen by Lloyds under changes to its terms and conditions. No more inflationary increases will be made.

    The final salary pension plans were closed to new members in 2000. But union chiefs claim thousands of other staff who have joined in the past decade now fear Lloyds may also make cuts to their terms and conditions.

    Ged Nichols, general secretary of Accord, said it was “particularly difficult” for staff to accept given the bank’s fortunes are recovering and “executives are reaping the benefits of this through share options”. Antonio Horta Osorio, Lloyds chief executive, is due to pick up three million shares in a mater of days.

    Mr Nichols said a scrutineer was being appointed ahead of a strike ballot which could trigger a damaging walkout by staff over Christmas and the New Year. The majority of the 35,000 are thought to be women employees in branches.

    In a letter to Nick Fisk, Lloyds’ head of employee relations, Mr Nichols said: “Members have been hugely critical of the bank with many saying that they have lost trust and confidence in the organisation. Some have described this latest attack on their benefits as the last straw.”

    He added: “Members who are not fortunate enough to be in the defined benefit [final salary] scheme are also worried because, if the bank can break its promises to its longest serving and loyal employees about their pensions, then what is safe in terms of condition of employment and other benefits?

    “Others have noted that staff who are transferring to TSB are being offered compensation for the loss of their future pension benefits but no such compensation is being offered to those who will be staying with the Lloyds Banking Group.”

    Lloyds swallowed crisis torn Halifax Bank of Scotland (HBOS) at the height of the financial crisis. Accord represents the bulk of these workers. Staff in the final salary pension had been receiving yearly increases in pensionable pay of two per cent, under a former cap.

    The cap will now be set at zero.

    Lloyds said it had to ensure “pension benefits are more balanced across the group”. It added: “The group is also conscious of its obligations to ensure the viability of the schemes and its ability to meet its obligations over the long term.”

     

     

  • U.K. mulls cap on pension fund charges

    The United Kingdom (UK) Treasury is to examine the case for capping the fees that pension funds are allowed to charge savers, in an effort to prevent exploitation of a new auto-enrollment system.

    According to Bloomberg, while falling prices have meant that the average charge on a fund started last year was 0.51 per cent, the Office of Fair Trading estimates there are more than 186,000 plans, containing 2.7 billion pounds of assets that are paying fees of more than one per cent.

    Pensions Minister Steve Webb said in a statement that people need to know they are getting value for money when they save into a pension and not being ripped off by excessive charges.

    “We are consulting on a cap on pension charges. A range of options will be on the table including an outright ban on all charges above 0.75 per cent per year.”

    Webb told the British Broadcasting Corporation (BBC) Today that the government will also look to promote consolidation among pension providers to get scale and drive costs down.

     

     

    Funds will also be banned from charging more when members stop contributing because they move jobs, he said.

    Options under consideration include a cap at one percent, a cap at 0.75 per cent, or a flexible cap allowing funds to go above 0.75 per cent to one percent if they can justify it to a regulator.

    Legal & General Group Plc (LGEN), the UK’s largest manager of pension assets, said the basic plan that employees receive automatically should cost no more than half a per cent.

    Adrian Boulding, pension-strategy director at Legal & General, said in a statement that all consumers deserve this level of value, whatever the size of firm they work for.

    “There are plenty of additional services that some people will find worth paying more for,” including wider investment choice and financial advice.

    Webb suggested he’d like to see most plans charging around 0.3 per cent. “Most could deliver at the sort of costs we are talking about, but because there’s very little competitive pressure in the market, they don’t do so,” he told the BBC.

    Gregg McClymont, pension’s spokesman for the opposition Labour Party, said ministers had been slow to realize the scale of the problem and respond.

    To impose a charge cap, the government will first have to have full sight of all costs and charges that can accrue in a pension,” he said in a telephone interview.

    “No steps so far have been taken by the government on this score.”

    Starting in April 2015, every UK employee will be signed up for a pension plan unless he or she opts out.

    According to the Treasury, this will mean as many as 9 million people saving for a pension for the first time or increasing their savings, and an extra 11 billion pounds invested each year.

    The OFT concluded in an investigation September 19 that fee are too high and not always transparent. The Association of British Insurers agreed to an immediate audit of older and higher-charging funds, estimated to contain around 30 billion pounds of savings.