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Providers split on auto-enrolment ‘middleware’ charge ban

Scottish Widows has warned a Government intervention to stop firms charging members for automatic enrolment compliance software would be an “admin disaster” which would drive up charges.

A Pensions Institute report earlier this month urged policymakers to consider preventing providers from including the cost of compliance software in the annual charge levied on members’ pension pots.

The Department for Work and Pensions is considering whether to extend the ban on consultancy charging to include charges for so-called “middleware”.

Scottish Widows head of corporate pensions proposition Pete Glancy says: “On group pensions most of our submissions from employers come in on paper, often late and incorrect.

“If you look at that in the context of auto-enrolment that is going to be an admin disaster and our costs would go through the roof. They would double or triple potentially, which would translate into much higher charges.

“We put an electronic front end in our system, so you can only do auto-enrolment with us if you use our front end. We need the data to come in electronically, so we are forcing employers to give us electronic data to keep charges down for members.”

But Friends Life corporate benefits managing director Colin Williams says: “We welcome the Government review into middleware charges in relation to auto-enrolment schemes.

“We make sure we offer a range of appropriate charges for additional support services. These charges are funded by the employer because we do not consider them to be member costs.”

Last week, Legal & General pensions strategy director Adrian Boulding said tackling middleware charges is “the next logical step” following the ban on consultancy charging for auto-enrolment.

Investment Sense marketing manager Phillip Bray says: “We need full transparency of charges before the Government intervenes in this area.”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. goodness gracious 31st January 2014 at 9:58 am

    So I suppose this is as a result of payroll software providers lobbying government as they have found they are not selling their expensive AE tack on. Or third party payroll providers who are not getting as much additional work as they thought.
    Friends Life’s response is predictable as they want many thousands upfront in order to change an existing scheme to AE compliant.
    Or maybe it’s NEST, who do not provide middleware attempting to kybosh the opposition.
    The success of the UK was based on being practical and reasonable. If a firm has a cheap to run system that ensures the AE submissions are compliant and do not have anomolies, that is part of the pension package, just the same as electronic submission of protection plans are. It is ludicrous to sujjest that the employees are subsidising the employer via their charges. What next, employers to pay all the annual management fees until retirement?

  2. Bizarre, we get to the governments objective of unbundled charges, with fees directly attributable to services in a competitive and open market but still the government wants to interfere. Cheered on from the sidelines by those with undeclared vested interests.
    I declare my interests are providing quality service at a fair price and sometimes that will include implementing technology which can come at a price. My clients will make informed decisions about the services they want and agree to meet the costs of these services. I trust my clients to make a better decision about what they need and value more than I trust the government to dictate what they need.

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