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LEBC: Employers could face ‘unfair’ consultancy charging burden

Treasury 480

LEBC says preventing employers from taking a consultancy charge from employees’ pension pots would unfairly penalise companies setting up automatic enrolment schemes.

Last month, the Government was forced to clarify its stance on consultancy charging after the FSA issued a newsletter that said a consultancy charge cannot be levied on an auto-enrolment group personal pension if the employer is paying the minimum contribution.

The Department for Work and Pensions explained that a consultancy charge cannot be levied if it reduces a member’s contribution below the auto-enrolment minimum but can be levied once that contribution has been paid into a pension.

This week, the Trades Union Congress said employees should not be forced to pay their employer’s auto-enrolment costs.

LEBC divisional director of group savings and investments Glynn Jones says: “I think if employees are deriving benefit from the advice, it is reasonable for them to contribute to the cost of that advice.In a time of austerity, forcing employers to put their hands in their pockets twice – once to fund the pensions and once to pay for the set-up costs – would be unfair.”

Informed Choice managing director Martin Bamford says: “As long as the charge is explained clearly then employers should be free to deduct some of that charge from workers’ pension pots.”

A DWP spokeswoman says: “We are looking at charges in general, and will look at the issue of consultancy charges as part of this work.”


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