Costs and charges

Costs and charges

Since 2012, increasing attention has been given to the charges borne by members of work-based pension schemes, both in terms of the nature and level of these charges. This arose out of a concern that members of defined contribution (DC) schemes, especially work-based schemes which are subject to auto-enrolment requirements, were not getting value for money from their pension investment.

There are now various restrictions applicable to charges borne by members in occupational pension schemes and workplace personal pension schemes.

Restrictions on member-borne commissions

Member-borne commissions are arrangements whereby the service provider remunerates a pension adviser for advice or services provided to members or an employer and recoups this cost by imposing increased charges on members' pension pots.

The drive to restrict such commissions started on 31 December 2012 with the Retail Distribution Review (RDR), which resulted in pension providers of new group personal pension schemes, group stakeholder schemes and group self-invested personal pension being banned from paying commission to advisers.

For further information, see Practice Note: The Retail Distribution Review and pensions [Archived].

On 6 April 2016, the ban was extended to apply to:

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