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Aviva warns charging ban fails to tackle ‘back-door’ payments

Pensions minister Steve Webb

The Government’s draft rules to ban consultancy charging for automatic enrolment do not go far enough to tackle “back door” payments between providers and advisers, according to Aviva.

Pensions minister Steve Webb laid out draft regulations before Parliament this week to implement the ban on consultancy charges for auto-enrolment, first announced in May.

The draft rules say schemes that allow amounts to be deducted from a member’s pension pot and paid to a third party such as an adviser will not be classed as auto-enrolment schemes.

But Aviva corporate benefits head of policy John Lawson says members’ pension charges still pay for things like marketing, communication and  “blended” fund charges, where employee benefit consultants construct a default fund on behalf of an employer.

Lawson says: “There are charges out there which do not appear to be banned by this wording and you may find there are back-door ways around this. These charges all inflate the charge the member pays, and in many ways are no different from consultancy charges or commission.

“It is surprising the Government has not gone the full hog on this.”

Page Russell director Tim Page says: “The charging methodology is hard-wired into businesses, so there will always be a temptation for EBCs and providers to find ways around the rules to avoid having a grown-up conversation with the employer.”


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