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.
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.