In October, pensions minister Steve Webb announced plans to introduce a cap of 0.75% on pension fees, aimed at stopping employees incurring excessively high charges levied when they are auto-enrolled onto a pension scheme.
But the impact assessment published by the Department for Work and Pensions (DWP) has been labelled "not fit for purpose" by the Regulatory Policy Committee, which analyses Government policy before it becomes law.
"The evidence presented does not adequately demonstrate why [the cap] is considered to have a zero net impact on the pensions industry," the committee said, adding that the DWP's evidence would "have to be strengthened" so that it could "be validated at final stage".
The document has been sent back to the Whitehall department for redrafting.
Webb had planned on pushing through the fees cap by April 2014, but many people in the industry now doubt that will happen.
Hargreaves Lansdown head of pensions research Tom McPhail said because the consultation was rushed through so quickly, the entire consultation process and cap on charges is in "serious doubt".
"If the impact assessment figures were wrong then everyone involved in the consultation including employers, pension providers and the DWP's own officials will have to reconsider their conclusions from the consultation," he said.
"This will almost certainly mean a delay in the introduction of any charge cap on pensions, if one is introduced at all."
The People's Pension head of policy, Darren Philp, said: "The Government's charges impact assessment has been shown the red card by its own Regulatory Policy Committee.
"This was a consultation that lacked detail and was built on sand. The Government now needs to rethink and pick up the gauntlet thrown down by the recent Office of Fair Trading report to improve transparency and comparability across pensions."
