The Department for Work and Pensions (DWP) has announced that a £100 de minimis threshold will be introduced in April 2022 meaning that pension providers will no longer be able to charge a flat fee to all pension savers.

Pension savings invested in the default funds of schemes used for Auto-enrolment with a value of £100 or less will be exempt from paying flat fees to pension providers.

This announcement follows the DWP's consultation ‘Permitted charges within Defined Contribution pension schemes’, which closed in July 2021.

  • Since 2012, over 10 million employees have paid into workplace pensions.
  • Some individuals who have undertaken short-term work or who frequently change jobs have been automatically enrolled into a number of new workplace pensions, each with a low value.
  • This measure is designed to prevent the rapid erosion of smaller Pension savings due to fixed fees being charged.

The DWP's consultation included a call for evidence on the standardisation of permitted charges. The evidence gathered is being considered and findings will be published in due course. 

Plans are also in place to introduce pensions dashboards. These will allow pension savers to monitor their pension pots more easily.

Useful guides on this topic

Auto-enrolment: Workplace pensions (subscriber guide)
This guide looks at the key features of auto-enrolment, who is affected, what employers need to do, and the relevant timescales.

Employer pension contributions
Is there a taxable employment benefit if an employer makes contributions to an employee's pension scheme? What are the rules for employer pension contributions?

Pensions: Tax rules and planning
What tax rules apply to pensions? What tax relief is available? What tax charges can arise? What planning opportunities are there?

Pension contributions: Personal or company?
Is it more tax efficient to pay pension contributions personally or via your own company?

Pensions: Tax charge for excess contributions
When does a tax charge arise for excess pension contributions? What are taxpayers' responsibilities under Self Assessment? 

Pensions: Unauthorised payment charges
What is a pensions unauthorised payment? When does a tax charge arise? Who pays the charge? 

External links

DWP news: New rules put savers’ interests first

DWP consultation: Permitted charges within Defined Contribution pension schemes

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