Investment managers join in Turner attack

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Leading investment management companies are fiercely opposed to the idea of the proposed National Pensions Savings Scheme (NPSS) imposing a maximum charge.

The Investment Management Association (IMA) has told the Government that the new scheme could not be run for 0.3 per cent a year, as Lord Turner of Ecchinswell's Pension Commission has insisted, and that managers should be allowed to charge much more for their services.

In its submission to the pensions minister Stephen Timms, who is preparing a White Paper based on Lord Turner's proposals, the IMA said the cost of the NPSS could in theory be set at "no more than 0.5 per cent a year". But Richard Saunders, the IMA chief executive, said it would be wrong to prevent the NPSS using fund managers charging higher fees, if their investment performance merited the additional expense.

"The board of the NPSS should be able to decide to pay for active investment management promising outperformance," he said. "If that outperformance was not delivered, the board could be held accountable."

The National Association of Pension Funds and the Association of British Insurers have said a charge of between 0.4 and 0.7 per cent a year would be feasible.