An industry body has called on the government to set out its next steps on plans for new levies on small self administered pensions.
The Association of Member-Directed Pension Schemes, which represents Ssas providers, claimed the lack of a consultation timetable is causing business owners to pause decisions on setting up pension schemes.
Andrew Phipps, chairperson of the body, said: "Amps members expressed strong opposition to the Department for Work and Pensions' consultation on the general levy on pension schemes, which proposes to increase the levy rates for schemes with less than 10,000 members, potentially including Ssas, by an additional £10,000 from 2026.
"This would be unfair and disproportionate to the small schemes sector and would discourage the use of Ssas as a flexible and cost effective pension vehicle for business owners and entrepreneurs."
In October the DWP set out three options for proposed changes to the levy on occupational and personal pension schemes.
The first option is to continue with the current levy rates and levy structure and the second looks to keep the current levy structure but increase rates by 6.5 per cent each year.
While the third would increase rates by 4 per cent each year and have an additional premium rate of £10,000 for small schemes (with membership up to 10,000) from 2026.
Consultation on the options closed on November 13.
Phipps added: "This consultation is having real world consequences for our members and their clients.
"There has been no timetable agreed and many of our members are seeing clients so concerned at the potential levy being applied to a Ssas that they are pausing the setting up of the pension, or looking to move the pension away from a Ssas which could have a material effect on the sector.
"We continue to urge the DWP to reconsider its approach and to engage with the industry to provide clarity and find a more reasonable and sustainable solution."
A DWP spokesperson said: "We have been carefully considering the responses to the consultation and aim to publish our response in due course, and subject to Parliamentary approval, introduce legislation to apply new levy rates from April.”
When the consultation was launched, DWP said it was working out whether The Pensions Regulator could be fully funded by the sector.
It added: "The pensions industry has benefitted hugely from the inflow of auto-enrolment members and the government therefore accepts that the sector, rather than the taxpayer, should pay for the employer compliance regime."
tara.o'connor@ft.com
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