Employers using Now: Pensions for auto-enrolment could be slapped with fines if they use BACS transfers to make pension contributions.
Yesterday, Money Marketing revealed how members and employers are due to suffer a Christmas ‘blackout’ as the scheme switches administration providers.
As part of its migration to the new admin provider – JLT Employee Benefits – the provider is asking employers to set up direct debits for pensions contributions. Employers who continue to use BACS transfers will have to pay £75 plus VAT per payment to cover “additional administrative steps”.
Employers who joined the scheme after January 2014 already make contributions using direct debits and will not be affected.
Advisers say other providers don’t levy a charge for using BACS and warn employers making weekly contributions could see fees stack up.
LEBC divisional director of group savings & investments Glynn Jones says the extra cost could hit £4,000 a year, although Now: Pensions insists it would not allow this to happen.
He says: “That’s quite a lot of money. Obviously by getting JLT involved they’re having to move to direct debit. It’s quite an added expense especially if you’re a weekly payer.”
Syndaxi Chartered Financial Planners managing director Rob Reid says he is not aware of any other providers charging employers in this way.
Standard Life confirmed it does not charge if employers use BACS when making contributions.
A Now: Pensions spokeswoman says only a “minority” of employers who cannot pay via direct debit will be affected and they will be given a grace period before the charge kicks in.
She says: “Our preferred method of payment going forward, in common with many other auto enrolment providers, is direct debit. This is clearly the most efficient method of payment for large scale pension contribution processing.
“Some of our clients have historically paid across pension contributions by BACS. Following the move to our new administration provider, these clients may wish to continue doing so for a period of time whilst we discuss the benefits of a move to direct debit and what that may mean for their own business.
“Following the migration we will therefore not immediately charge our clients for a continuation of the use of BACS. These are conversations that we will have with each of our clients in due course.”