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PFS: Advisers must grasp “huge” auto-enrol advice opportunity

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Personal Finance Society chief executive Keith Richards

The Personal Finance Society has urged advisers to seize the “huge opportunity” offered by automatic enrolment after research revealed 76 per cent of micro employers have yet to choose a pension scheme.

The PFS commissioned a survey of 500 small and micro employers in June to determine awareness and how these companies will prepare for the reforms ahead of their staging date.

Forty-nine per cent of respondents said they would turn to an adviser when choosing a pension scheme, while a third said they would seek advice on setting up and running a pension for their staff.

The PFS says the research also suggested some “confusion” among small employers about who the reforms apply to, with 6 per cent saying they didn’t think they would need to comply.

PFS chief executive Keith Richards says: “Our research into small firms’ readiness for the workplace pension reforms provides unequivocal proof that financial advisers have a major role to play in helping guide thousands of small and micro employers, covering millions of the UK’s population, into auto-enrolment and ultimately pension provision for the very first time. 

“It is a concern that some micro employers still believe that the reforms will not apply to them. Whether this is due to a lack of certainty or lack of awareness, the Government must do as much as it can to clarify that auto-enrolment applies to all employers, and that they should start preparing as soon as possible. 

“A decisive media campaign, particularly targeted at micro employers and encouraging them to seek advice if unsure, would do much to dispel any misunderstanding or confusion.”

Radcliffe & Newlands chartered financial planner Mel Kenny says: “For a long time many IFAs have been trying to draw the attention of SMEs and what better foot in the door than the need to talk about employer pension obligations?

“The key is to streamline this process to avoid it becoming a cumbersome and unprofitable exercise.”

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  1. Whoever micro firms choose as their pension provider it should not be NEST unless they want comparitively high charges, bad outcomes, dire employee comms, and the prospect of fraud (their annual report reveals they have already given aay £1.4m in a fraud) .

    Advisers should direct small employers towards the likes of NOW Pensions and The People’s Pension and suggest a thorough comparison is made to ensure employees do not come back to them in years to come asking “why have you enrolled me in such a bad pension scheme.”

    In 30 years time I am sure thousands of employees will be making mis-selling claims against their employer for enrolling them with the Government default NEST – an organisation perversely not subject to the same FCA controls as its competitors.

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