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B&CE eyes new auto-enrol employer charge

B&CE, the firm behind The People’s Pension, is considering introducing a new charge for employers using the scheme for auto-enrolment, Money Marketing understands.

Board members at the firm are understood to have discussed the possibility of a fee paid by smaller employers, in addition to the 0.5 per cent annual management charge on members’ pots.

The People’s Pension and Now: Pensions, two of the main rivals to Nest, do not currently impose any minimum requirements and accept all employers.

But The People’s Pension director of policy and market engagement Darren Philp warns the intense timetable for smaller employers staging in the next few years and regulatory pressures might mean a different model is needed. He says no changes will be made before 2016.

He says: “We are currently looking at how we would make sure we can meet our commitment to be open to all and serving that market.

“We haven’t made any decision yet on what that model would be but we reserve the right to have a different model for different sectors, as any provider would. But our key objective is to make auto-enrolment work for next year.”

He adds the firm will be pushing for regulatory change to ease the burden on small employers and pension providers, and to how The Pensions Regulator’s levy is applied. 

He says: “The regulator’s levy has a huge impact when you’re dealing with very small pots and small employers. It has a huge impact on us.

“86p a member doesn’t sound a lot but when a lot of your pots are £10, what does 0.5 per cent AMC give you on that? If you’re paying 86p for regulatory costs you’re running that member at a loss for a significant period of time, even before you’re doing things like covering assets under management, statutory communications and the other costs of running a pension scheme.”

In July 2013, Money Marketing revealed providers were imposing minimum contribution requirements and lower limits for the number of members per scheme before accepting clients.

Standard Life has imposed a £1,200 annual charge on small employers who have agreed a deal above the incoming 0.75 per cent fee cap, while Legal & General charges SMEs a £1,000 “set-up fee”. 


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. This does not bode well. There is a significant difference between a traditional provider such as Standard Life which is a commercial body with profits in mind and with access to hundreds of investment funds and a not for profit organisation like The Peoples Pension. It would be a great shame that one of the differentiators is lost by TPP charging a fee to employers. Sadly it looks like NEST may be the only long term option.

  2. It’s already hard comparing member costs (fixed fee and AMCs) between providers … add into the mix employer fees (which in some cases already applies) and you’ve also got yourself a potential conflict of interest.

    So Mr employer with 5 employees you have scheme 1 with an AMC for members of 0.75% and scheme 2 with an AMC of 0.5% but a £1,200 fixed annual employer fee…. hmmm

    My understanding is that the Government is keen to ensure members do not meet the cost of employer AE compliance but where there’s an uneven playing field (IMHO) that’s precisely what is likely to happen.

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