DWP to ban flat fees for small pension pots

The decision aims to prevent the cost of charges and administration fees from eroding pension pots.

The intentions were laid out in the government’s response to the review of the default fund charge cap and standardised cost disclosure. In addition to this, it was revealed that no changes will be made to the charge cap of 0.75 percent and that transaction costs will stay separate to this fee.

The consultation was initially launched in June 2020 and ran until August 2020. It was published in reaction to concerns raised about the negative impact that flat fees and administrative costs have on small pension pots.