Pension regulator to keep 'close eye' on employer advice post-RDR
The Pensions Regulator says it will be watching closely to see whether the impact of retail distribution review makes it less attractive for employers navigating auto-enrolment to use IFAs.
In a work and pension select committee hearing this morning, Conservative MP and committee member Oliver Heald said there was a risk that “very transparently” having to pay for advice as a result of the abolition of commission could put employers off.
The Pensions Regulator chief executive Bill Galvin said of the 56 per cent of employers who will seek advice only around one third say they are willing to pay for it. He added that advisers would have to demonstrate the value of their service to those firms.
He said: “This is something that needs to be worked through between advisers and employers and it is something we will be keeping a close eye on.”
Auto-enrolment of employees into workplace pensions gets under way this October with the RDR coming into force on January 1 2013.
The Government has said it is willing to consider capping pension charges if the industry cannot come up with a plan to keep them low enough. However, Galvin warned against a cap calling it a “blunt tool” which would make it harder for new entrants to come to market.
He said: “A world with very strict regulation confining charging structures might limit opportunities for people to bring propositions to market which are more suitable for different types of customer. We need to accommodate propositions that appeal to well paid and well informed workforces as well as the median employee.”