The government today branded as speculation claims that the introduction of its planned charge cap on defined contribution pension schemes has been put off till next year.
A Department for Works and Pensions consultation last year explored the possibility of capping charges on auto-enrolment schemes. The cap would first be imposed on employers staging from April 2014 and be extended to cover all schemes by April 2015.
The Financial Times last week reported that the cap would be shelved for at least a year, and possibly beyond the next general election. Instead, the government is believed to want to issue a new white paper on the broader issues of pension charges and governance.
The DWP told The Actuary that the implementation of the cap would be delayed. But this was due to the consultation receiving '166 responses that inevitably takes a long time to go through', a spokeswoman said.
She refused to comment on the estimated implementation date.
'We are looking at the consultation responses and will make an announcement in due course.
'This is an important and complex consultation that requires our proper consideration to ensure we get it right.'
The delay has prompted opposition demands for an explanation as to why the government is 'kicking rip-off pension charges into the long grass'.
Gregg McClymont, Labour's shadow pensions minister, said: 'Is it chaos and disarray within government, or have ministers caved into the vested interests of the fund managers and pension giants who are accused of slicing and dicing the savings of hard-pressed British savers?'
'Capping pension charges would help families in Britain who are facing a cost-of-living crisis. Labour called for a cap on pension charges last year, but regrettably the government failed to act and now ministers seem to be in full scale retreat.'
Others accused ministers of creating a climate of uncertainty.
'[The delay] is bad news for savers. High charges, or even moderately high charges, have a very large impact on final fund values,' said Morten Nilsson, chief executive at NOW Pensions.
'Capping the overall percentage of an individual's pension pot that can be lost to charges over the lifetime of the scheme would protect savers but give providers flexibility in terms of what they offer and how their charges are structured.
'Delaying this decision creates uncertainty for the industry and for the tens of thousands of employers who are selecting a workplace pension for auto enrolment this year.'
But others welcomed the delay. Hargreaves Lansdown said the argument in favour of introducing a charge cap now had been 'poorly made'.
'Far more value is being lost from the pension system at the point of retirement than would be saved through the implementation of a charge cap,' said Tom McPhail, head of pension research at the firm.
Kevin LeGrand, head of pension policy at Buck Consultants, agreed that the delay was good news for the pension industry.
'The government has apparently decided to take stock and give proper consideration to the wider issues which include the need for greater transparency of charges and of the effects on a commercial market of using such a blunt instrument.'
Last month, the DWP was heavily criticised after its assessment of the impact of a cap on pension charges was given a 'red card' and deemed as 'not fit for purpose' by the independent Regulatory Policy Committee.