The introduction of Nest is likely to result in a loss of business for IFAs because employers will have access to “standardised” pension schemes, says Royal London.
Speaking to Money Marketing at a fringe event at the Liberal Democrat conference in Liverpool this week, Royal London head of corporate affairs Gareth Evans said this would be due to qualifying pension schemes being introduced under Nest.
He said: “IFAs spend a lot of their time installing quality pensions for their clients and there are a lot of employers who are going to rationalise their pension arrangements over the next two years.
“The standardisation of pension schemes is what is going to cause the problem. We will have a definition as to what is an acceptable scheme and a lot of employers will start organising their own pensions and will choose not to go to an adviser. There is a distinct possibility that good schemes will be replaced by schemes that are less generous.”
Evans added that advisers will need to work hard to prove their worth to employers. He said: “Advisers are going to have their work cut out to explain why they provide good value for money, especially in the pension area.”
The Government will announce its decision on the future of Nest by the comprehensive spending review on October 20.