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Webb: Small firms will not need auto-enrolment advice

Pensions minister Steve Webb says that the availability of “fairly standard” products for auto-enrolment should means that small firms do not have to seek advice.

Many IFAs are gearing up to offer small firms advice as they begin to auto-enrol staff into workplace pensions. But, giving evidence to the work and pensions select committee this morning he said it is his “goal” to make the need for expensive tailored advice, especially for small firms and lower earners “unnecessary”.

He said: “I almost want to say I do not want most firms to have to seek out a lot of expensive advice. We are resourcing the Money Advice Service and The Pensions Advisory Service and so on, so there will be a lot of general information but there will not be specific individual tailored expert financial advice. Our goal is to make that not necessary, it would be crazy.

“Big firms will be able to afford employee benefit consultants to look at the market. But further down the track we clearly do not want small firms to be spending money on advice if that is not necessary. If what people are providing is a fairly standard product at a low charge I do not want firms to be agonising about whether  they go with firm A or firm B because it will be a simple product.”

Conservative MP Harriett Baldwin asked Webb who would be providing advice if estimates that as many as 10,000 IFAs could leave the market as a result of the RDR.

Webb said: “Somebody on minimum wage just was not going to pay for IFA. It just was not going to happen. No IFA is going to touch them with a bargepole unless they are feeling charitable. The charge on a small contribution will not be worth having.”

For more on this morning’s hearing see Money Marketing’s live blog.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Well Mr Webb, if small companies don not need advice then perhaps you could get NEST to explain the high set up costs, or explain to the small employer how nest fits in with his existing arrangements and what definition of salary do I use.
    And when you have arranged all of that perhaps you should tell them what happens when you get to the next stage of Pensions simplification that the government has thought of.

  2. No one on mimimum wage will be taking up auto-enrolment, unless by mistake!

  3. It’s refreshing to see that Mr Webb has a good understanding of his subject. Maybe he needs to sit QCF Level 4 before providing further advice…?!!

  4. So this idiot thinks I want to pay a good chunk of my salary into something for 40 years and take it that all will be OK because it has low charges.

  5. How can anybody on £10,000 or thereabouts per annum (GROSS ) ever afford to save into anything at all, let alone NEST or any other scheme for that matter. Opt out will be far greater than anticipated as wages are driven lower by the current climate.

  6. Does this all sound familiar to anyone? These guys are deluded.

  7. Nest needs advice as it is not the way forward for savers. Using the site, contributions over 40 years amounting to £50,400 are projected to be worth £103000 with pcls £25700 and a pension of £3980. Contribution charge of 1.8%, AMC 0.3% ,an interest rate of 3.7% against infaltion of 2.5%. The underlying fund is predominantly invested in fixed interest and gilts with the recently heavily fined UBS involved. What a joke! get on the site you won’t believe it. I urge everyone to compare with personal pension funds and journalists you need to inform the public of this debacle.

  8. Nice to see everybody agree for once. What an idiot this guy is.

  9. Stakeholder deja’vu me thinks?

  10. Small employers will not need advice. Has Mr Webb read the 220 pages of guidance on The Pension Regulators website? I challenge him to have a good understanding of this let alone a small employer!!

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