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Categories:Pensions

Govt scrutinises pre-RDR auto-enrolment 'advice rush'

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Steve Webb 480 NAPF 2012

The Government is scrutinising the auto-enrolment advice market ahead of the RDR deadline for evidence of a “rush” to sell products on a commission basis.

The analysis will be undertaken once the Department for Work and Pensions has gathered evidence from the Association of British Insurers on how advice fees are being structured for group personal pensions.

A Government source says: “We are interested in making sure people get value for money from their pensions and that charges are fair and transparent to the member.

“We are keen to know if there is a rush to sell products before the end of the year to take advantage of commission.

“If we find that this is the case and members are being auto-enrolled into a scheme that is not value for money then that would inform our thinking on any possible legislative action.”

Earlier this year, pensions minister Steve Webb (pictured) accused advisers of “dissing” Nest, the low-cost scheme set up by the Government, and pushing clients towards scheme which pay commission.

He said: “Nest would be very suitable for many small and medium-sized firms but the IFAs and employee benefit consultants are not doing it.”

AWD Chase de Vere head of communications Patrick Connolly says: “There has been a lot of talk about a last minute commission rush but I have not seen any evidence of that materialising and I do not think it will.”

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Readers' comments (2)

  • Surely the Govt arent that stupid are they?

    If you impose changes and give a deadline, people are going to rush to implement changes if it is beneficial to them.

    If you ask any financial director in the land if they want to pay a fee from their profits, or if they want you to take commission, we all know what the answer will be.

    Its a bit like telling Govt employees that they need to request that their wages are paid by the 29th of the month. If they dont request, they wont get paid. I guarantee that they would all be there in the few days before the 29th asking for their pay.

    I really do worry about the type of people who are making decisions about this industry and this country. Very few of them have any commercial sense at all. They all live in the government world of being unaccountable but still being paid very well (and dont even start on the pension benefits!)

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  • On what basis, Mr Webb, are you assuming that a scheme paying commission represents poorer value than one paying none with fees having to be paid on top? Have you or any of your minions undertaken a comparison? Or considered that employers should be free to make their own choices in such matters? Is it that you think consultancy fees should be set at a paltry £25/hr and that we can actually survive in business on such a rate?

    And why are you still saying NOTHING about the urgent need for simplification or measures to address the annuity rates trap?

    Why don't you admit that you're just a puppet of the Treasury, allowed only to make noises about the subjects on which they say you can?

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