Standard Life will impose a £1,200 annual fee on small employers which have agreed auto-enrolment terms with the provider above the 0.75 per cent charge cap.
Last month, pensions minister Steve Webb confirmed that any scheme with a charge above 0.75 per cent would not be eligible for auto-enrolment from April 2015. Also in March, Standard Life chief executive Paul Matthews warned employers they could have to pay extra pension fees as a result of the cap.
The provider has now confirmed it will levy a £100 per month “scheme management fee” on plans with fewer than 50 members and average contributions below £150 per month. This will allow Standard to reduce its charge below the 0.75 per cent cap.
Standard Life head of workplace strategy Jamie Jenkins says: “We have been considering ways of sharing the cost of providing the pension scheme between the employee and employer, while mitigating any cross-subsidy between schemes. This will result in us asking some employers to pay separately for emp-loyer administration services.”
Aegon is also considering imposing employer levies for schemes with charges above the cap.
A company spokesman says: “The cap creates a challenge for the ind-ustry of achieving commercially via-ble charges for small or low contribution schemes. Levying a charge on employers is one way of addressing this.
“We consider pricing on a case-by-case basis.”