The DWP said that it recognised “the additional challenges and risks” a flat fee structure can present, but that its view was not to ban flat fee structures outright but to consider incorporating new conditions intended to limit their application in circumstances where scheme members would lose out.More specifically, it said it was considering measures that would set a minimum pot size before a flat fee could be charged.In a blog post, Henry Tapper, former director at First Actuarial and now looking after his own company, Age Wage, said the DWP’s suggestion with respect to flat fee charging was “the one new idea” in DWP’s consultation.“This will be painful,” he wrote. “Small pots are already causing a lot of pain to master trusts and they are moving to combination charges out of financial necessity.”Transaction costs, CTI take-upAs part of its “call for evidence” the DWP is also is seeking industry views on including transaction costs within the 0.75bps charge cap.It said it wanted to “assess the effectiveness of any measures designed to improve disclosure of transaction costs before deciding whether a cap on these costs would be appropriate, and if so, at which level it should be set”.The DWP is also seeking input on options to assess and widen take-up of the standardised cost disclosure templates developed by the industry Cost Transparency Initiative (CTI).Questions it is asking include whether legislative information is required to support adoption of the CTI templates, and how easy it is to request cost information from asset managers.There is no industry-wide data on the use of the CTI templates, although the CTI has reported strong take-up.The DWP’s consultation can be found here. It is open until 20 August. The DWP said it aimed to bring forward proposals in response to the consultation later this year.To read the digital edition of IPE’s latest magazine click here. The Department for Work and Pensions (DWP) has suggested imposing new conditions on the use of flat fees in default arrangements in defined contribution (DC) auto-enrolment schemes.It is seeking industry views on this as part of a wider consultation on the charge cap for default DC auto-enrolment arrangements and standardised cost disclosure.A flat annual fee can be combined with a percentage of funds under management for one of two permissible combination charging structures for default funds in DC auto-enrolment arrangements.While seen as providing the greatest benefit to members with the largest funds, flat fees have been criticised for having a regressive effect on small pension pots. read more