Q&As

Does a tiered charge structure, whereby members are subject to a single annual management charge whose rate varies depending on the value of their pots, constitute a single charge structure under regulation 5 of the Occupational Pension Schemes (Charges and Governance) Regulations 2015, SI 2015/879? Moreover, would changes to the tiered rates (or introduction of new tiers) be prohibited by regulation 5(4)?

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Published on LexisPSL on 30/08/2017

The following Pensions Q&A provides comprehensive and up to date legal information covering:

  • Does a tiered charge structure, whereby members are subject to a single annual management charge whose rate varies depending on the value of their pots, constitute a single charge structure under regulation 5 of the Occupational Pension Schemes (Charges and Governance) Regulations 2015, SI 2015/879? Moreover, would changes to the tiered rates (or introduction of new tiers) be prohibited by regulation 5(4)?

Does a tiered charge structure, whereby members are subject to a single annual management charge whose rate varies depending on the value of their pots, constitute a single charge structure under regulation 5 of the Occupational Pension Schemes (Charges and Governance) Regulations 2015, SI 2015/879? Moreover, would changes to the tiered rates (or introduction of new tiers) be prohibited by regulation 5(4)?

Regulation 5 of the Occupational Pension Schemes (Charges and Governance) Regulations 2015, SI 2015/879, contains a prohibition on charge structures other than single or combination charge structures.

A single charge structure is defined under SI 2015/879, reg 5(2) as a structure which imposes an existing rights charge on the member, ie a charge calculated solely by reference to the value of the member's rights under the scheme.

Conversely, under SI 2015/879, reg 5(3), a combination charge structure is one which imposes a combination of:

  1. an existing rights charge on the member, and

  2. another type of charge (either a flat fee or a charge calculated as a percentage of the value of the member’s contributions)

The government’s intention in introducing this prohibition is to make charge structures simpler and more transparent so

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