Advisers say the introduction of punitive charges for paying pension contributions using Bacs and the prospect of a Christmas blackout have seriously dented Now: Pensions’ attraction as a provider.
Last week, Money Marketing revealed the auto-enrolment scheme was warning employers and members they would be locked out of online services for over a month while the scheme switched administration providers.
As part of the admin switch from Equiniti Paymaster to JLT Employee Benefits, Now: Pensions is also encouraging employers to use direct debits when sending pension contributions. Those who do not could face a £75 plus VAT charge per payment to cover “additional administrative steps”.
Syndaxi Chartered Financial Planners managing director Robert Reid says quite a lot of small firms would use Bacs to send their employees’ pension contributions.
He says: “The introduction of a Bacs charge and the threat of more charges impacts on the attractiveness of the Now: Pensions offering. Given the options at retirement, will that event be used for even more charges?”
Ringrose Grimsley IFA Victor Sacks worries the provider is starting to come unstuck as the pressures of auto-enrolment bite.
He says: “Does the blackout imply they’ve already bitten off more than they can chew? Is the Bacs issue just a capacity crunch? What happens when we really get into the meat of this? And was Now: Pensions just coming in to get some low-hanging fruit? It is a new kid on the block and all of a sudden there seems to be something wrong somewhere.”
First Actuarial director Henry Tapper says he has been concerned about Now’s switch to JLT since the move was announced in April.
He says: “Frying pans and fires spring to mind. We’re concerned there’s too much being placed on JLT, which could create market concentration and a serious falling-off in service standards.”
But Tapper says the bigger problem is Now: Pensions is placing too much responsibility on the shoulders of small firms, which are in danger of making mistakes.
He says: “They are trying to tell their clients that it’s their responsibility to provide clean data whereas, historically, it’s been the best endeavours of both clients and providers in getting it right.
“Now: Pensions have moved from ‘We’re going to help you’ to not helping and ‘If you don’t get it right, on your head be it.’ We don’t think you can do that.”
During the online services blackout between 19 December and 30 January, around 400 employers, representing 200,000 members, will not be able to use systems. Employers must also submit contributions files by 11 December to give Equiniti time to process them before the handover.
Rowley Turton director Scott Gallacher says this kind of switchover is “unprecedented”.
He says: “It’s slightly worrying this has happened early doors in the auto-enrolment process. Potentially six weeks without access to the systems doesn’t seem ideal. I’ve never known something like a six-week blackout period.
But he adds: “In a normal market with 20 providers, things like this would have more of an impact. You’d think ‘Why take the risk?’
“It’s not ideal but we wouldn’t stop using them right now. However, if more of these issues come to light, we might consider it.”
Now: Pensions head of transition relationship management Tracey Treslove says: “With any migration of pensions data, a blackout period is standard and absolutely necessary to ensure a clean and certain set of data is transferred.
“We shall remain in close contact with those clients who are affected and will be in touch with them again in writing at the end of November and immediately before the blackout period starts.”
Now: Pensions adds only a “minority” of employers who cannot pay via direct debit will be affected by the Bacs charge. Employers will be given a grace period before the charge kicks in.