View more on these topics

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.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com