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Government announces crackdown on pension charges

Pensions minister Steve Webb said the government was putting charges "in a vice".
Pensions minister Steve Webb said the government was putting charges "in a vice". Credit: David Jones/PA Wire

The pensions minister has outlined new caps on pension industry earnings that he says "will transfer £200 million" from providers' profits into "the pockets of savers".

Speaking in the House of Commons, Steve Webb announced plans to cap charges on workplace pensions at 0.75% of the funds being managed - the toughest of the options being considered.

"We are going to put charges in a vice and we will tighten the pressure year-after-year," Mr Webb said.

The cap will apply from April 2015, he said, and will include company pension schemes provided through automatic enrolment.

The move follows far-reaching pension reforms which were unveiled in George Osborne's Budget last week.

Explained: How private pensions are changing

Tax-free lump sum pension limit rises to £30,000

The changes announced by Chancellor George in last week's Budget mean that from today:

  • The size of the total pension savings that can be drawn down entirely and taken as a lump sum rises to £30,000, without incurring a 55% tax charge.
  • Previously, someone with a £30,000 pot would have had to pay taxes and charges of £21,000 if they wished to take this as a lump sum, but now they will pay £4,500, leaving them £16,500 extra.
  • The size of a small pot that can be taken as a lump sum, regardless of total pension wealth, is increased five-fold to £10,000.
  • The minimum yearly income that is required to access pension savings flexibly is cut from £20,000 to £12,000.

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First phase of pensions changes come into force

Pensions changes were announced in George Osborne's Budget last week. Credit: PA

The first phase of the Government's pensions revolution has come into force, giving thousands of people greater freedom over how they use their retirement savings.

The shake-up means that around 400,000 people will be able to access their pension savings in a more flexible way in the coming financial year.

Cameron: 'Why shouldn't we help bingo players?'

The Prime Minister has defended the controversial poster which said Budget help for bingo players and the price of beer were "to help hardworking people do more of the things they enjoy".

Speaking to ITV News Deputy Political Editor Chris Ship, Mr Cameron said: "I didn't see the poster myself....I think actually people have been very patronising to say that we shouldn't help bingo and that we shouldn't make sure that responsible drinkers can afford a pint in the pub."

Read: Tory bingo and beer advert criticised

PM hints at protecting benefits for wealthy pensioners

David Cameron has hinted that protecting benefits for wealthy pensioners would go into the Conservatives' next manifesto.

The Prime Minister said not giving benefits, such as winter fuel allowances, bus passes and cold weather payments, to top-rate taxpayers would save only "a tiny amount".

Prime Minister David Cameron speaking at a PM Direct event earlier.
Prime Minister David Cameron speaking at a PM Direct event earlier. Credit: Steve Parsons/PA Wire

Speaking to Saga members in Peacehaven, near Brighton, Cameron said that cutting the benefits would also "introduce another complexity into the system".

He told the audience: "We will set our policy for the next Parliament at the next election. I don't want to pre-judge that.

"But the only thing I would say is that people think you save lots of money by not giving these benefits to upper-rate, top-rate taxpayers."

PM 'believes it is right to give people greater choice'

David Cameron believes "it is right to give people greater choice" when it comes to their retirement, the Prime Minister's official spokesman said.

Prime Minister David Cameron speaking at a PM Direct event earlier.
Prime Minister David Cameron speaking at a PM Direct event earlier. Credit: Steve Parsons/PA Wire

He told a Westminster media briefing: "These are people who have been saving for many years in defined contribution schemes and we trust them in the decisions they make.

"It's not for me to give advice. It is about ensuring that good advice is available to everyone."

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PM: 'Condescending' to suggest pensions cash blowout

David Cameron told ITV News it was "very condescending" to suggest people who are given the opportunity to drawdown money from their pensions will spend it all at once.

The Prime Minister told ITV News Deputy Political Editor Chris Ship: "I think it is a very condescending view to say to people who've worked hard, who've saved, 'We don't trust you because we think you're going to blow all that money you saved on one item or one holiday'.

"I simply don't believe people will do that ... These people who've worked hard, who've saved, they've been thinking about their retirement and it's only fair to let them spend their money in their retirement as they choose".

Read: Cameron says pension reform 'the right thing to do'

Cameron: 'Good to talk' about pensions at event

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Good to talk @sagauk event about how our pension & savings plans in #Budget2014 are about helping & trusting people. http://t.co/Ioze7eXFws

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Read: Cameron says pensions reform 'the right thing to do'

Cameron: We kept promises this Parliament

ITV News Deputy Political Editor Chris Ship, who is in the audience at David Cameron's PM Direct event, wrote on Twitter:

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Hint of change on wealthy pensioner benefits? PM: Kept promise this Parliament-we make new pledges for next Parly but it saves "tiny amount"

Cameron: Pensions reform 'the right thing to do'

David Cameron said giving people freedom with their pensions funds was "the right thing to do" and that this was "the right time to do it".

Prime Minister David Cameron addresses a PM Direct event in Brighton.
Prime Minister David Cameron addresses a PM Direct event in Brighton. Credit: ITV News

The Prime Minister told an event in Brighton that he doesn't believe people are "fundamentally irresponsible" or that they will spending all the money they draw down from their pension.

Watch live: Cameron talks pensions at PM Direct event

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