Advisers are set to lose £1.16m a year as the Government turns off commission on occupational schemes used for auto-enrolment.
In the Department for Work and Pensions’ response to its consultation on banning member-borne commission, it confirmed the ban would come into force for new arrangements from April 2016.
It will consult later in 2016 on regulations affecting commission deals already in place.
The ban hits all qualifiying auto-enrolment schemes and will be policed by The Pensions Regulator.
An impact assessment published by the Regulatory Policy Committee on behalf of the DWP earlier this month estimates advisers will lose £1.16m a year as a result of the ban.
The DWP estimates around 20,000 auto-enrolled members are currently saving into schemes that pay out commission at an average of £58 per member per year.
The RPC says: “Financial advisers will be able to offset some of these costs by moving to other arrangements, such as charging scheme members for advice, or will result in transfers between different financial advisers.”
It adds: “Evidence suggests the incidence of new arrangements that include a commission has been declining and commission arrangements are not used at all by the majority of schemes/providers.
“The Department does not, therefore,expect the proposal to have a quantifiable marginal effect on the use of commission under the new arrangements.”