Pensions minister Steve Webb has said the government is "absolutely prepared" to cap private pension fund management charges if they hinder saving.
The Department for Work and Pensions (DWP) today faced pressure to protect consumers from perceived excessive charges as Hugh Bayley, Labour MP for York Central, asked if the government would impose a cap.
In response, Webb said that the creation of the government's low-cost savings vehicle, the National Employment Savings Trust (NEST), was prompting providers to drop adminstrative charges on their corporate pension products.
He added the government granted itself the power to impose an industry-wide cap on management charges in the 2011 Pensions Act and said it will be used if charges are found to be a significant deterrent to saving.
The questions came as 48 MPs, mostly from Labour, signed an early day motion (EDM) calling on the government "to drive pension charges down".
The motion draws on comments from David Norman, former Credit Suisse Asset Management chief executive, who said pension charges are too large and not understood by consumers.
Charges in the UK render pension products more expensive than those in France, Germany and the US, and pose a risk to the "fragile savings culture" existing in the UK, the motion said.
MPs signing the motion asserted that without reform, pension charges could drive pension fund management business abroad.
The news comes after the National Association of Pension Funds (NAPF) launched a consultation on creating a way of disclosing charges to consumers in a simple "pounds and pence" format.
Lord McFall, chairman of the Workplace Retirement Income Commission (WRIC), last year called for a cap on pension fund charges.
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