The government has stalled on the publication of its strategy for dealing with charges in workplace pension schemes for another month.
Sources close to The Pensions Regulator said the department for work and pensions would not publish the results of its consultation paper, Better Workplace Pensions: A Consultation on Charging, until February while it determined whether to include transaction costs within a proposed charge cap.
The consultation, outlined in the 43-page document, ran from 30 October to 28 November last year and the results were widely expected to be published this month.
It outlined various options that included limiting charges to either 0.75 per cent or 1 per cent for funds under management, as well as a ‘comply-or-explain’ model that would see pension schemes justifying higher costs to the regulator.
A spokesman for the DWP said: “This is an important and complex consultation that requires our proper consideration to ensure we get it right and we will confirm a publication date in due course.”
The credibility of the consultation suffered a major blow last month when the government’s own regulatory policy committee gave the charge cap plans a negative ‘red’ rating, arguing the DWP was underestimating its likely impact on the pension industry. It also agreed with widely expressed concerns that pension providers may raise their charge levels to meet the cap-level.
Adviser view
Chris Daems, director of London-based Principal Financial Solutions, said: “The legacy of auto enrolment will last for at least another 40 years in my view, so it is better to use this extra month to untangle this area rather than rush it through. Having said that, we urgently need to make costs simple and transparent otherwise pension schemes will never have proper engagement with employees.”
