TUC warns of employer auto-enrolment costs
Consultancy charging could “sour the introduction” of auto-enrolment, the Trades Union Congress has warned
Brendan Barber, general secretary of the TUC, warned that many employers are seeking outside help to set up schemes, and claimed some employers may pass on these consultancy charges to staff.
He has called on the government to ban employers from passing on the costs of consultancy advice once they are legally required to automatically enrol staff into a pension.
Mr Barber said: “It is completely wrong that staff who pay into auto-enrolment pensions should have to meet the employer’s costs of making sure they obey the law. This is cost should fall on the business as a whole.
“Particularly in low-paid sectors where staff change job frequently, those unlucky enough to work for employers using consultancy charging could find a big chunk of their pension going to consultants, rather than to provide retirement income.”
Mr Barber insisted that the TUC supports auto-enrolment, but warned: “We worry that consultancy charging will sour its introduction. We applaud pension schemes such as the National Employment Savings Trust who have said they will not implement consultancy charging.”
FSA guidance on auto-enrolment in an RDR newsletter, said: “Where a group personal pension is being used for automatic enrolment, the minimum contribution levels are net of any consultancy charge.
“A consultancy charge is not permitted to reduce the effective contributions to an automatic enrolment scheme below the minimum amounts.”
The department for work and pensions said last month that firms could charge fees after contributions have entered a pension scheme.
A spokesman for the DWP said: “We are determined that people will get the most out of their pension savings; we are looking at charges in general, and will look at the issue of consultancy charges as part of this work. SMEs do not start automatically enrolling until April 2014 and if we need to act by then, we will.”