Low awareness of auto enrolment cap on charges
26 November 2014
Almost a third of businesses have not heard of the forthcoming workplace pensions charge
cap, according to the latest research from Close Brothers Asset Management.
Many thanks to Employee Benefits for their report:
While a 0.75% cap on the annual charge that pension schemes can apply whilst continuing to meet the qualifying criteria for auto enrolment will come into force in April 2015, there is still widespread uncertainty on whether a business is affected, or how their terms with their provider will change. Worryingly, nearly a third (31%) of businesses have not heard of the charge cap, or have not been informed by their provider or adviser.
Close Brothers Asset Management’s latest Business Barometer survey, which questions over 900 employers across the UK, also found that although 30% of businesses with pension schemes were aware of the changes, they were still awaiting revised terms from their provider.
A further 33% of businesses said their scheme’s annual management charge (AMC) was already below the cap. Just 6.4% said they were looking at moving to a new scheme as their existing provider intends to apply an additional employer charge.
One impact of the cap is that pension providers will shortly cease paying some types of commission to pension advisers, meaning advisers will seek to replace this with fee arrangements. While 42% of businesses with workplace pensions schemes said they will not be affected as their pension adviser already works on a fee basis, nearly a quarter (23%) have not yet been made aware of the issue by their adviser.