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Call for ban on auto-enrolment consultancy charging

Anne Begg

The work and pension select committee has called for an immediate ban on members paying consultancy charges in auto-enrolment schemes.

In a report into improving governance and best practice in workplace pensions, published last week, MPs say consultancy charges could damage confidence in pension saving and auto-enrolment.

The report also calls for a ban on active member discounts as they can “significantly” reduce the amount of money available to members in retirement.

Last month HMRC confirmed consultancy charges will be subject to VAT payments.

The Government launched an urgent review of consulting charging in December and will publish a report later this month.

WPSC chair and Labour MP Dame Anne Begg says: “The plethora of costs and charges that can be applied to pension pots are not only confusing, they can seriously impact on an individual’s retirement income.

“We are particularly concerned about member-borne consultancy charges and those charges applied to deferred members – people who stop contributing to their pension scheme. Neither can be justified; both should be banned.”

The report says until a ban can be put in place, the Government and regulators should issue urgent guidance to the industry to clarify “acceptable” levels of consultancy charges.

Pensions expert Ros Altmann says: “At the moment, it is perfectly permissable for unqualified, unregulated advisers to charge auto-enrolled workers for advice that is only given to the employer. That is despite the fact the workers’ pension fund is paying for the advice. This is wrong and should be banned immediately.”




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