According to the Financial Conduct Authority, the UK regulator has proposed exempting certain performance-linked fees from the 0.75% charge cap that applies to default funds in workplace pensions. The exemption would give providers greater flexibility to consider private equity, venture capital and private credit investments, while requiring them to demonstrate that higher charges are justified by additional value for savers. Providers would not be obliged to use the exemption, and performance fees falling outside the cap would still reduce investment returns. The FCA emphasized that flexibility does not permit higher charges without justification, and firms must carefully weigh returns, risks and costs when assessing what serves savers' best interests. Responses to the consultation are due by January 14, 2027, with final rules expected in summer 2027.
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