Research and analysis

Impact assessment opinion: charges in qualifying pension schemes

Red rated evaluation of DWP impact assessment on charges in qualifying pension schemes


Impact assessment opinion: charges in qualifying pension schemes

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Proposal [extracted from impact assessment]

Individuals saving into a pension scheme generally incur charges. Information on charges is not always clear. When employers are choosing a workplace pension scheme, they are often unaware of the charges their employees will pay. The policy aims to protect individuals from excessively high charges, particularly where automatic enrolment means they have not made an active decision on their scheme. The consultation stage impact assessment (IA) considers two principle options: (i) improved disclosure of pension scheme charges by pension providers, and (ii) a charge cap on pension schemes that are used by employers for the purposes of automatic enrolment.

Factors contributing to rating of the RPC opinion

The IA, as drafted, does not give a clear assessment of the potential impact on the pensions industry, particularly where a charge cap could be introduced. In addition, the options have been not costed on a consistent basis so as to allow meaningful comparison at consultation stage.


In a small number of instances departments have chosen to proceed with an IA that has received a red “not fit for purpose” rating from the RPC. In this case, the Department went out to consultation on 30 October 2013, before they had received an opinion on the Impact Assessment from the RPC.

Published 18 December 2013