The main headlines from the DWP's recently published response to its Review of the Default Fund Charge Cap and Standardised Cost Disclosure are that there are to be no changes to the charge cap for default funds in DC auto-enrolment schemes, and that transaction costs will continue to be excluded from the charge cap.

Trustees, employers and fund managers might be tempted to see this as a "no response needed" update, but should also be aware of the proposed introduction of a prohibition on flat rate fees for members who hold £100 or less in a default fund (or funds, if more than one is held in the same arrangement). On the face of it, this looks like taking the concept of "de minimis" to extremes, but schemes should not assume that they hold few, if any, pots this small.

The DWP has not set out timescales for the introduction of this prohibition, but we suggest that schemes begin a review of the small pots that they hold in default funds to see whether it may apply once legislation is passed. Even if there are currently no members with pots worth less than £100, it would be sensible to understand and monitor the numbers of small pots: the DWP says that the de minimis amount will be reviewed and will increase over time, meaning that increasing numbers of pots will be caught by the prohibition. Even if not currently affected, schemes should begin to consider how fees will be adjusted if and when the de minimis level is reviewed and more members are caught, as well as how they may otherwise look to consolidate small pots to bring them above the de minimis amount.