We reported in November (here) on the Government’s proposals to implement a cap on charges levied on members in workplace pension schemes with effect from April 2014. While it is important that members of such schemes receive value for money, in the comment at the end of our article we did raise some concerns that a reduction in costs might lead to less innovation in investment strategies and a reluctance among providers to make available additional services such as annuity broking or member communications.
The Government has now announced that any capping of charges will be deferred, at least until April 2015. This is a sensible decision: the rushed introduction of a cap this year would have left many employers having to unravel their plans for auto-enrolment and negotiate new arrangements at the last minute.