Pensions minister Steve Webb has confirmed the auto-enrolment charge cap and ban on active member discounts will be delayed until April 2015.
Speaking at the Confederation of British Industry pensions conference in London today, Webb said the Government needs to “think carefully” about transition arrangements for pre-2015 schemes.
Speaking to Money Marketing after his speech, Webb also confirmed any ban on AMDs would also be delayed and that “nothing changes” this April.
He said: “There was a view in the consultation responses that changing the rules within 12 weeks of an employer’s staging date didn’t quite stack up. So the changes we make will apply to firms who stage from April 2015.”
However, in a written ministerial statement published this morning Webb said a charge cap “will not be introduced before April 2015”.
The statement said: “We remain strongly minded to cap pension scheme charges in the default funds used for automatic enrolment. However, we have consistently encouraged firms to start getting ready for automatic enrolment twelve months ahead of the time the new employer duties apply to them.
“Therefore, to give those employers at least twelve months notice of the rules that will apply to them; I can confirm that any cap on charges will not be introduced before April 2015.”
A Labour source says the wording of the statement is “tantamount to saying the reform is dead in this Parliament”.
Labour shadow pensions minister Gregg McClymont says: “Capping pension charges would help families in Britain who are facing a cost-of-living crisis.
“Ed Miliband called for a cap on pension charges over a year and a half ago, and the Government subsequently promised a pension price cap. But it has botched the job.
“Today the minister’s “full frontal assault” on pension charges has turned into a headlong retreat.”
It remains unclear at what level the Government plans to set the charge cap or whether transaction costs will be included. The DWP has proposed three possible charge caps – 0.75 per cent, 1 per cent or a two-tier “comply or explain” model.
The DWP assessment of the impact of a pension charge cap was branded “not fit for purpose” by the Regulatory Policy Committee because it fails to clearly show the affect it will have on pension providers.
Aegon managing director of workplace solutions Angela Seymour Jackson says: “Rushing new scheme conditions through at this critical stage would have disrupted many employers’ plans to use good existing schemes.
“The pensions minister’s decision will avoid employees losing out on valuable contributions while employers made alternative arrangements.”