It adds that it will now not respond to the consultation before the new year.
Yesterday the RPC, the independent body that validated impacts on business of government departments regulatory and deregulatory proposals, found that the DWP’s impact assessment is not fit for purpose.
But the DWP says it disputes the findings of the RPC and adds that its rating will not influence its proposals or the consultation.
The RPC highlighted serious potential flaws in the impact assessment for the consultation, which shows the cost of increasing disclosure of charges as being more than eight times as expensive as implementing a charge cap.
The RPC questioned why Option 2 in the consultation, which requires an increased disclosure of information by pension providers, is expected to cost the industry £172 million, while Option 3, an industry wide charge cap in qualifying pension schemes, is only expected to cost the industry £19 million. It argues that this suggests that the IA’s estimates are significantly overstated in Option 2.
The RPC determination asks why, given that Option 2 and 3 appear to result in different benefits, namely Option 2 will improve transparency and disclosure of charges, while Option 3 will introduce of a charge cap, a combination of Options 2 and 3 has not been discussed.
A DWP spokesperson says: “We do not agree with this rating, which has no implications either for our proposals or for the consultation process. The reason for consulting on a charge cap was to gather evidence about the potential impact of our proposals on savers and the industry. Our final decision will be based on evidence we have received, not on our initial impact assessment.
“We are in the process of reviewing the consultation responses and will make an announcement in due course, which, as today is the last day Parliament sits is likely to be in the New Year.”
