The People’s Pension gives back more than £1 million a month to members
The People’s Pension1 has today (October 4th) revealed that it now gives back more than £1 million a month to its members in the form of rebates on its annual management charge (AMC).
Its charging structure consists of three components:
- an annual charge of £2.50 – equivalent to 21p a month
- a management charge of 0.5% of the value of a member’s pension pot each year
- a rebate on the management charge (between 0.1% on savings over £3,000 and 0.3% on savings over £50,000)2
This charging structure was introduced to reward its members for saving more and to reduce the cross subsidy by active members to millions of small, inactive pots which are increasingly created by auto-enrolment.
Since the rebate was introduced last year, The People’s Pension, provided by not-for-profit organisation B&CE2, has, given back more than £12.5 million to its members who have pots above the required threshold. This figure is only set to increase as individual pots grow, with members on the current structure projected to receive a total rebate of £34.5 million a year in five years’ time.
This comes as the Government is running a consultation on the proposed introduction of a universal charging structure, which could see combination and graduated charging structures, such as the rebate given by The People’s Pension, no longer permitted.
Patrick Heath-Lay, CEO of B&CE, provider of The People’s Pension, said:
“As the UK’s largest independent master trust, we have a responsibility to do what’s best for our 5 million members. This charging structure rewards our members for saving more by using our profits to directly benefit them and improve their chance of a better retirement.
“As automatic enrolment matures, the number of people benefiting from this as well as the total size of the rebate we pay out will grow considerably and could help members to save thousands more towards their futures3.”
Note to editors
1. The People’s Pension is a leading workplace pension scheme from the not-for-profit B&CE Group, with more than five million pension savers from over 95,000 employers and £16 billion assets under management.
2. For a full breakdown of our charging structure visit: https://thepeoplespension.co.uk/member-annual-management-charge/
3. Assuming a member aged 35 with a starting fund of £15,000, a salary of £30,000 per year, paying 8% gross contributions, based on qualifying earnings for the 21/22 financial year, investment returns of 5% per annum, inflation of 2.5% per annum, and a retirement age of 68, this could add up to an extra £14,566.