Small and medium-sized companies could be receiving bad advice in the run-up to stakeholder pensions, according to research by pension administration specialist FPS Group and the Federation of Small Business.
The research claims many businesses get poor advice, with companies being recommended poorly performing pension providers.
It shows 73 per cent of small and medium-sized ent erprises with active schemes seek pension adv ice from a range of IFAs, banks or insurance company agents.
It shows that more than 40 per cent of SMEs will take the first recommendation given to them. Thirty-five per cent of SMEs with active schemes received advice from IFAs, 26 per cent went to bank advisers and 12 per cent to insurance company agents.
FPS says companies are often signing up to stakeholder providers where performance does not necessarily justify the recommendation and the issue needs to be addressed.
The research shows companies are largely ind ifferent to advice from unions and trade bodies.
FPS chief executive Rich ard Stirrup says: “In certain cases, companies are being advised to take a stakeholder pension from a provider whose longer-term pension performance is poor.
“Our research also sho wed awareness and understanding of stakeholder pensions was low. So now more than ever SMEs need to be able to trust the advice they are receiving and not simply choose the first product that they are offered.”