Our perspective on the October 2021 Budget and the DC Charge Cap

Commenting on today’s Budget, Pavan Bhardwaj, Trustee Director at Ross Trustees, said:

“The Chancellor’s delivery of a pro-growth, pro-investment Budget reflects the government’s ambition to rebalance the economy towards emerging technologies and green infrastructure. The news that the Government plans to consult on changes to the regulatory charge cap on defined contribution pension schemes clearly feeds into this broader approach.

“By loosening the current charge cap which applies to the vast majority of funds held in DC pensions, the Chancellor has his eye on an estimated £500 billion pool of funds which could potentially be directed into illiquid assets. Notwithstanding the record amounts of ‘dry powder’ already awaiting investment, the Chancellor hopes that by unlocking these funds, the additional supply of capital will ultimately create its own demand and the economy will benefit from the investment in longer term projects.

“It is important that the consultation takes a serious view of the potential risks associated with the proposed strategy, as well as the necessary safeguards that will be required to protect savers from potentially opaque charging structures. The devil will be in the detail with regards to the success of this proposal and we look forward to contributing to the consultation in due course.”

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