Under new plans, the Financial Times reports, the Government is considering a relaxation of the pension fee cap in the hopes of raising funds for its flagship “levelling up” agenda. The move could drastically affect the pensions landscape, but also have a palpable impact on Britons themselves. There are concerns about what this could mean for retirement plans of those hoping to leave the workforce at a certain age. According to XPS Pensions Group, based on reaching a typical pot of £305,000 by 66 – working out at £19,000 per year inclusive of the state pension – Britons may be forced to work five more years if fees rose from 0.75% to 1.5%. Adding five years onto one’s working life is obviously a major concern for individuals who have already mapped out their retirement plans. The consultancy suggested that if fees rose to one percent, an extra year of work would be necessary. However, if fees were to rise to two percent, based on the same equation, there would be a staggering extra nine years of work on the table. The calculations assume a person saved from the age of 21, at £200 per month with a retune of five percent per year. The pensions cap was first introduced five years ago in an effort to protect workers who are auto-enrolled into workplace pensions. At the time, there were concerns workers would have their hard-earned pension savings eroded by high charges. But the higher fees could help to fund long-term projects such as better infrastructure, renewable energy projects and tech, all of which the Government is interested in for its “levelling up” agenda. The matter is not yet set in stone, however, if there were to be an announcement, it is expected imminently.

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