The National Association of Pension Funds (NAPF) Pension Quality Mark (PQM) has lowered its cap on charges to 0.75 per cent from 1 per cent of pot size per year which could in turn leave people with a pension pot worth 8 per cent more.

The PQM stated that charges linked to annual management, administration, contributions and consultancy paid by savers in default funds should not exceed the 0.75 per cent figure which will be effective from 1 April 2013.

PQM chairman Chris Hitchen said: “Up to 11 million people will be auto-enrolled into a workplace pension so we have to change defined contribution for the better. We want to push fees down so that savers can enjoy better pensions. Charges can have a huge impact on people’s savings, and our tougher new standard is a big step in the right direction.

“Pension charges have decreased since the introduction of PQM, but we don’t want these gains to be unravelled as auto-enrolment reaches medium and smaller-sized employers. These employers, and their workers, deserve information about what good defined contribution pensions look like, and that’s what PQM provides.”

Those schemes that have already qualified for PQM will have an extra two years to meet the new charges standard. PQM schemes that applied before 1 April 2013 will have to comply with the new rules by their first renewal after 1 October 2014.

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