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Auto-enrolment charge cap plans ‘delayed by at least a year’

Government plans to cap charges on workplace pensions are set to be delayed for at least a year, according to a report in the Financial Times

Earlier this week, Money Marketing reported that the publication of the Government’s final proposals may be delayed as Treasury officials were at odds with the Department for Work and Pensions over the level of the charge cap, with the Treasury pushing for a higher cap of 1 per cent.

Sources say the Treasury favours a higher cap of 1 per cent as it is reluctant to be seen as too interventionist. However, the DWP favours a stricter cap of at least as low as 0.75 per cent.

In October, the DWP published a consultation paper setting out plans to impose a price cap on auto-enrolment default funds from April this year, with final proposals planned for this month. 

The Financial Times reports that the reforms have now been put back until next year at the earliest, meaning they may not even take place during the current parliament.

In a joint statement, the DWP and Treasury say: “This is an important and complex consultation which requires our proper consideration to ensure we get it right, and we will confirm a publication date in due course.”

In December, independent body the Regulatory Policy Committee slammed the DWP’s assessment of the impact of the charge cap as “not fit for purpose” because it failed to clearly show the effect the cap would have on providers.

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