The Government could force pension providers to levy a separate fee for automatic enrolment compliance software after an independent report raised concerns about the way firms are charging for “middleware”.
A report from the Pensions Institute last week urged policymakers to consider preventing providers from including the cost of compliance software in the annual charge levied on members’ pension pots.
The report says: “We suggest policymakers, regulators and those responsible for scheme governance should consider very carefully whether it is fair for scheme members to pay the costs of employer compliance, and whether it is fair they should pay for the services providers give free of charge to advisers in order to help them sell their schemes.”
Legal & General pensions strategy director Adrian Boulding says: “L&G charges employers extra for compliance software and we have taken a lot of stick in the press for doing that.
“Tackling this is the next logical step. If the provider is doing something for the employer rather than the employee then the employer should be charged a fee for that.”
Rowley Turton director Scott Gallacher says: “This would pull the rug from underneath a lot of employers. Provided the costs are in respect of running the pension scheme then I don’t really see this as a problem requiring Government intervention.”
A DWP spokeswoman says: “We have already taken action to ban consultancy charges in auto-enrolment schemes. In our recent consultation on charging we sought views on how these regulations are working in practice and what the impact would be of extending them.
“We are continuing to examine the responses to that consultation and will bring forward further proposals in due course.”