UK pensions industry berates cap process The government has been accused by the pensions industry of pressing ahead with a contentious cap on pension charges without following the proper process. The accusation follows a damning report on the evidence put forward in support of the measure. The Department for Work and Pensions said on Thursday that its consultation on a charge cap would not be thrown off course by criticisms that were published a day earlier by its own policy oversight body. On Wednesday, the Regulatory Policy Committee, an independent body that scrutinises the analysis used to back up government policy decisions, had taken the unusual step of issuing a "red rating" on the department's impact assessment on the charge cap. "A red means that the opinion is "not fit for purpose,"" said Michael Gibbons, who chairs the RPC. If an impact assessment receives a red rating, this means we have significant concerns with the analysis or evidence presented. However, figures in the pensions industry warned that the proposed charge cap - of either 0.75 or 1 per cent, on schemes in which workers were automatically enrolled - was being rushed through with scant regard for the concerns raised. "Despite the RPC's opinion, the DWP still intends this legislation to take effect from April 2014, leaving no opportunity to lessen the breakneck pace at which this consultation and the subsequent legislation, are being pursued," said Helen Forrest, head of policy at the National Association of Pension Funds, which represents workplace pensions schemes. We want to see effective and thoughtful reform introduced without delay, but rushed legislation is almost certain to provide unexpected, and unwelcome, consequences. Will Aitken, senior consultant with the professional services group Towers Watson, suggested that party politics were compromising the legislative process. At the time the proposal was announced in October, the government and the opposition were locked in battle over cost-of-living issues, with the government later announcing plans for a cap on payday loans and rail fares. "I think the whole thing has been rushed and there has been a lot of political pressure, from within and from the opposition party who campaigned on a cap," Mr Aitken said. David Cameron tweeted that the government was capping pension charges even before the consultation had concluded. The RPC, which comp­rises experts from business, unions and academia, rarely issues red ratings on policy making, having dispensed only 11 in the course of 1,500 department assessments. It first flagged its concern at the pension charge cap assessment to the DWP on December 5. But the department did not act to strengthen the evidence being presented. "Normally, in 99 per cent of cases, the department chooses to resubmit its impact assessment in order to get a "fit for purpose" rating," said Mr Gibbons. We can't comment on why DWP acted the way they did with this policy but they are usually good at following proper processes. This is the first time we have had to publish a red DWP opinion. The RPC added that the DWP had also departed from normal process by submitting the impact assessment several days after it had launched its public consultation on its proposals. Typicaly,an IA is scrutinised ahead of a consultation. The DWP confirmed that it had met the RPC to discuss its evidence. But it said it did not agree with the red rating, saying it had "no implications, either for our proposals or for the consultation process." "We are now working through the information collected through the consultation process, which will inform the drafting of a substantive impact assessment," a DWP spokesman said. We will be publishing our response to the consultation in due course. This is an important and complex consultation, which requires our proper consideration to ensure we get it right.