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Unions call for employers to pay auto-enrolment costs

Frances O Grady TUC 480

The Trades Union Congress wants to see employers meet the cost of auto-enrolment rather than have the costs met by employees through consultancy charging.

In an interview with The Mail on Sunday, newly appointed TUC chief Frances O’Grady (pictured) said the TUC was concerned some employers will look to take auto-enrolment charges from employees’ pension pots rather than meeting the costs themselves.

She said: “It is wrong that staff who pay into auto-enrolment pensions should have to meet the employers’ costs of making sure they obey the law. This cost must fall on business as a whole.”

The TUC has written to pensions minister Steve Webb to call for him to act. The Department for Work and Pensions told the newspaper: “We will look at consultancy charges. If we need to act, we will.”

The Government was forced to clarify its stance on consultancy charging earlier this month after the FSA issued a newsletter which said a consultancy charge cannot be levied on an auto-enrolment group personal pension if the employer is paying the minimum contribution. The DWP explained a consultancy charge cannot be levied if it reduces a member’s contribution below the auto-enrolment minimum but can be levied once that contribution has been paid into a pension.

Last week HM Revenue & Customs published new guidance detailing how adviser charging can be applied for personal and group pension schemes.

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