Dr. Barra Roantree:

On the issue of fees, which the Deputy mentioned, the key thing is that the fees charged are as low as possible because we are talking about a group that is not particularly attentive to their pension affairs right now. The reason we are introducing automatic enrolment is that we know these people have put this on the back burner and we want to default them in. By that same logic or for the same reasons, we should be really concerned that the fees they will be charged on their pensions are as low as possible. I cannot say what that number is but it is really important that there is a real emphasis on ensuring that it is as low as possible because these fees can add up substantially. The annual management charge of Nest Pensions, 0.3%, gives us an idea of what has been done in the UK with a similar motivation. That company also has some charges on the inflow. It is quite complex to work out how annual charges and charges on the inflow equate to one another. In another committee, I heard people saying that Nest's charges work out at 0.48%, which is about the same, but it depends on how big the pension fund is and on the flow and sequence of contributions. It will be really important to see more evidence for the basis on which that level is set. Particularly if it is the CPA that sets this level, it should be set on a bottom-up basis. It should consider the costs that must be covered and what level of fees that equates to, which should be as low as possible. Whether that cap is 0.5%, 0.3% or something else, the key thing is that it is as low as possible because these fees really do stack up and can become quite a large share of people's pension savings.