View more on these topics

70,000 Firms flout stakeholder rules

Government admits that only one company has been prosecuted

The Government has only prosecuted one employer out of the 70,000 companies which have broken the rules on stakeholder pensions.

The news has led commentators to doubt whether the proposed national pension savings scheme could be effectively policed.

Axa head of pensions and savings policy Steve Folkard says the stakeholder admission from pensions reform minister Stephen Timms in Parliament recently poses questions over the Government’s ability to slash costs while raising the numbers of people saving in a pension.

Folkard says the stakehol- der regime affects employers with five or more staff while Lord Turner’s proposals for the NPSS hugely magnify the number of employers that will have to be monitored and the cost of policing this.

He believes the Government will have to be much more flexible on the cost of the scheme and massive issues need to be addressed over how employers will provide advice and pay contributions and what penalties will be introduced for those who fail to meet these requirements.

The Pensions Regulator currently holds responsibility for prosecuting schemes falling foul of stakeholder guidelines after taking over from Opra.

Hargreaves Lansdown head of pensions research Tom McPhail says: “If any pension reform is going to be successful in increasing savings, it is going to require the resources to police employers, which means increased costs to the model Turner proposed or a different model altogether.”

Folkard says: “Huge question marks remain about the costs of policing the NPSS, shown by the fact that only one employer has been pros- ecuted for breaking stake- holder requirements. You will have to force these employers to operate the schemes which increases costs and challenges the current debate.”

Timms said: “There are an estimated 350,000 such firms at any one time and it is estimated that around 70,000 of those are not complying with the requirement to designate a stakeholder pension scheme.”

Recommended

Supermarket leap as bond charges rocket

Fund supermarkets are sending annual charges on bond funds soaring by up to 85 per cent to compete with “ridiculous” commission paid by life companies, claims BestInvest business development manager Justin Modray. He says marketing mater- ial from FundsNetwork and Cofunds shows that annual charges on funds held within their onshore bonds are markedly higher […]

Threesixty seminars to tackle tax issues

Threesixty services is running a series of 12 free IFA seminars on tax planning issues including exploiting exemptions and allowances.

Hutton says education and advice are key to reforms

Work and Pensions Secretary John Hutton believes that for pension reform to work, credible financial education and advice are key to ensure that consumers are aware of the investment risks. Speaking at a pension deb-ate in Parliament last week, Hutton said pensions are never risk-free and should not be treated as such, with finan- cial […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com