Steve Webb's commitment to introducing a charge cap on auto-enrolment (AE) schemes has "shamefully" collapsed, according to Labour Lord Desmond Browne.
A Pension Bill amendment tabled by Browne demanded the government lay regulations on a charge cap before next year's election, following speculation the Department for Work and Pensions (DWP) will abandon the proposals.
During the House of Lords debate, Browne suggested the pensions industry had successfully lobbied the government to drop plans to restrict costs in defined contribution (DC) schemes.
He said: "In announcing the consultation and the choices for capping he quite deliberately attracted headlines that created an expectation that a cap would be introduced shortly, probably by April of this year and at less than 1%. In October 2013 he said, ‘Enough is enough' and in October 2013 it was enough.
"Shamefully, his resolve now appears to have collapsed in the face of lobbying by pension companies.
"Now insurance companies require at least a year's notice of a potential cap during which - using the minister's own phraseology - countless bunches of people will not get into a decent-quality scheme."
Government response imminent
DWP Lords spokesman Lord David Freud told the house he would not speculate on the potential level of a charge cap, but stressed a government response to last year's consultation will be published before the end of this parliament.
He added he was "disappointed" Browne had brought the amendment, as he had been "absolutely clear" on timing.
Freud said: "Consultations have sought views on policy implementation. Employers made clear that they wanted sufficient notice of any new scheme requirements.
"The minister remains strongly minded to cap charges and, as former ministers know and can tell the noble Baroness, Lady Drake, significant policy decisions must go through due process, but the government response is coming soon."
While a government amendment on charge transparency, which will allow DWP to specify the charges which must be disclosed, was accepted, a division vote saw Labour's charge cap amendment defeated by 165 votes to 225.
Opposition members also failed to push through an amendment on pot follows member, which would have allowed the DWP to consider aggregator models as an alternative for small pots consolidation.
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