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Regulator says providers must police auto-enrolment contributions


The Pensions Regulator has published a draft code of practice setting out the role of providers in policing automatic enrolment pension contributions.

In September, TPR issued a consultation which proposed forcing providers to check the way employers calculate member contributions to make sure they are correct.

Pension providers hit back, warning the regulator’s stance would be expensive to implement. The Association of British Insurers suggested checking the application of agreements between employers and employees is outside the current framework of workplace pension rules.

A draft code, published today, requires providers to put in place “risk-based processes” to check whether employers are paying pension contributions when they should be.

The regulator says in order to do this, providers will need to obtain information on contributions due to be paid by the employer and on behalf of the member, the pensionable pay that contributions are paid upon, and the due date for payment of contributions.

In March, Money Marketing revealed industry concern that this approach will force providers to abandon smaller employers who are considered more likely to make contribution mistakes.

Speaking to Money Marketing, TPR executive director of automatic enrolment Charles Counsell says: “Auto-enrolment is a game changer in terms of how pensions will work.

“What we want to do is shine a very bright spotlight on ongoing duties and in particular the duty to maintain contributions. It is absolutely critical to auto-enrolment’s success that the employer continues to pay money into the scheme.

“But it cannot be right that an employee of a smaller company would get a lower level of protection than an employee of a larger employer, so it has to be right that this process gives all members the same level of protection.

“This goes hand in hand with the quality requirements we are looking to put in place for DC schemes. Ultimately if you are running a pension scheme and you cannot monitor contributions properly that is unacceptable.”

The regulator says it is developing an online tool which will allow providers to report contribution payment failures.

Aegon says the new code, if implemented, will see providers place greater scrutiny on legacy schemes.

Regulatory strategy manager Kate Smith says: “Older schemes with manual processes or which have exhibited issues in the past must now be subject to closer scrutiny by providers.

“Some employers may already be considering upgrading to new technologies and The Pensions Regulator’s requirements are likely to prompt more to do so. Advisers are well-placed to help employers on this journey.”



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There are 9 comments at the moment, we would love to hear your opinion too.

  1. “But it cannot be right”

    I read this statement so often. To me it reads as I want the taxpayer to underpin the achievement of some nebulous goal. If the taxpayer isn’t on the hook, I want someone else to do it for free. To expect pension providers to police such metrics is overreach.

    They will implement such onerous qualification criteria that small employers will defacto be excluded.

    Think around the problem Mr. Counsell. I have.

  2. No need for the TPR then if providers are doing their job for them – can we expect to see a reduction in numbers at TPR as they won’t need as many employees – the providers will do that for them.

    By the way Mr Counsell: –

    1) AE is not a change in how pensions work it is a change in how they have the administration carried out. Instead of pay in & take out at the end there is now a lot of silly complex rules & regulations to adhere to as to how to pay in, who can pay in & how much.
    2) SME’s will still get the protection as a large company, difference is they won’t want to pay for it. But then surely NEST will be the answer for everyone – thats the outcome you want isn’t it. No choice for anyone.
    Try facing all the people in the industry who are being made redundant because of the FCA; TPR trying to make companies race to the bottom line – only way to achieve that now is redundancies.
    Remember who said a price worth paying to lose so many – Hector – who went on to feather his own nest or should that be NEST?

  3. Given AE is payroll, why don’t you ask providers to be responsible for all payroll issues as well.

  4. Providers should refuse en masse.
    Why should they do the TPRs job for them, unless, as has already been said,we see a great reduction of staff in TPR.

  5. This was always on the cards once they realised that employers could not be trusted to get it right and they decided that advisers should not be allowed to charge for sorting the mess out. If I were a provider I would be hopping mad and sue the government for the costs of setting up the systems and plans already available.What a disgrace these people are.

  6. Got to love this country.

    Run by a bunch of idiots who couldnt plan and organise a p up in a brewery.

  7. Stephen Rowland 7th June 2013 at 11:46 am

    Talk about discrimination against Financial Advisers! – is there no bounds to which they will stoop to put most / nearly all Financial Advisers out of Business?

    Thought that NEST might be a way of INTRODUCING Financial Advice / Planning to BUSINESS’S that really need it ie the small employer – but going on what is now being proposed looks like Regulator wants to get rid of all small advisers (at least) COMPLETELY!

    What have we done to ***s them off so much!!!!

    Perhaps being blamed for ALL the BANKER’S MESS!

  8. And this week’s new rule is…..!

    Must be more post-it notes stuck to the government’s AE file than you could shake a stick at!

    Advice for those in charge of such decision-making…Carry out due diligence testing on ALL aspects of AE, including consequential outcomes.Then carry it out again. Then cost it all out. Then determine who can/will pay. Then decide who can reasonably be expected to provide advice on implementation and how (should the govt. employ its own ‘salaried’ advisers for the likes of NEST maybe?). Then compare the cost of implementing such schemes with the adaptation of existing arrangements and CC.

    Then realise that what you wish for, in the form you wish for it, is not attainable. Not helpful I know, but I live in the real world! Big firms will find support, as they can pay advisory firms to implement the requirements. Wait until it comes to the 30 employees or less deadline!

  9. Providers police AE contributions? Welcome to the Mad Hatter’s Tea Party. If you wanted to find a more inept bunch to administer anything then you’ve come to the right place.

    Anyway many will be grateful and delighted. This will provide one of the best and biggest loopholes to this tax.

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