Standard Life is warning employers they could have to pay extra pension fees if the Government presses ahead with proposals to cap auto-enrolment charges.
In October, pensions minister Steve Webb set out plans to cap fees on auto-enrolment default funds at between 0.75 per cent and 1 per cent.
The reform was originally due to be introduced in April but was pushed back to April 2015 “at the earliest” to give employers more time to prepare.
Speaking to Money Marketing, Standard Life UK chief executive Paul Matthews says 2,500 employers have registered to use the firm’s auto-enrolment offering in the first 10 weeks of this year.
He says when the provider issues quotes it informs employers they may be required to bridge the gap if the quoted price is above any Government-imposed cap.
Matthews says: “We give employers a price quote and we tell them if any legislation is passed capping charges, there might be charges for the employer to pay if it wants to continue with that proposition.
“So if the employer still wants a scheme with a charge above the cap, we will work with the employer to collect that fee.”
Aegon regulatory strategy director Steven Cameron says it is not looking at billing an employer directly for any charge above a cap as it would be too complicated.
He says: “We held back from providing terms to employers at the beginning of the year in anticipation of a cap being announced and we explained to Department for Work and Pensions we could not sustain that position.
“We have not covered the explicit options that employers might have if a cap is introduced. Ultimately it is the employer who would need to meet any new obligations.”
A Scottish Widows spokesman says: “Our existing terms and conditions include the caveat that terms offered remain subject to any future changes in legislation such as the DWP pension review which is currently in consultation. We have no plans to change our approach.”
Wingate Financial Planning corporate adviser Richard Grover says: “It is crucial providers and advisers are absolutely clear to employers about the impact a charge cap could have on the scheme they have chosen for auto-enrolment.