Default funds are those in which your money is invested if you don’t make an active choice.
Such a cap, if it were applied, would most likely only touch on employees who are “auto-enrolled”. This is the process where workers are automatically signed up to a basic form of work scheme, currently being rolled out to embrace an estimated 11m employees. It started last year.
Officials are said to be concerned that this group in particular is protected from excessive charges.
At the time, Mr Webb said: “With millions of people taking up pension saving for the first time under automatic enrolment, we have to give people confidence that they will get good value for money. That is why we are banning consultancy charges, where scheme members end up paying for advice given to their employer.”
The consultancy fee ban came as the DWP published the Pensions Bill, which includes previously announced measures to bring forward the increase in state pension age to 67 to 2026-28 and introduce regular reviews of the state pension age.
Of the OFT’s investigation, which was launched in January, Mr Webb then added: “We will act promptly and vigorously later this year in the light of their findings.”
But the issue of pension costs touches a far wider savings base, as Telegraph.co.uk has previously reported, with high costs attached to policies entered into many years ago – and where it is difficult for savers to switch to better-value plans.