The Association of British Insurers says the Government’s decision to ban consultancy charging for automatic enrolment puts the success of the flagship pension reforms at risk.
Consultancy charging was devised by the FSA to allow advisers to take a fee from employees’ pension pots for advice given to the employer.
This morning pensions minister Steve Webb issued a written ministerial statement setting out the Government’s intention to ban consultancy charging for auto-enrolment pension schemes from today.
Webb said: “With millions of people taking up pension saving for the first time under automatic enrolment, we have to give people confidence that they will get good value for money.
“That is why we are banning consultancy charges, where scheme members end up paying for advice given to their employer.”
However, the ABI says the decision puts the success of auto-enrolment at risk.
ABI director of life, savings and protection Stephen Gay says: “We agree it is vital that savers have confidence that the pension savings system can be relied on and charges are an important part of that.
“However, the Government’s decision to ban consultancy charging in automatic enrolment schemes creates a different risk to the success of pension reform in that it will reduce the availability to employers of advice and support to ensure they make the right pensions decision for their employees.
”We need to discuss how that risk can be mitigated.”