Rival AE providers angry at regulator’s SME list ‘U-turn’

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Rival AE providers angry at regulator’s SME list ‘U-turn’

The Pensions Regulator’s decision not to pursue proposals to publish a list of auto-enrolment qualifying schemes available to small employers has been met with anger from some providers, who are worried many SMEs will simply opt for the default National Employer Savings Trust.

Today (5 March) the regulator issued its response to consultation feedback received on the proposals, stating that it will not be pursuing its plans for a list at this time as this is thought to be difficult to manage and monitor, but it said it will continue to keep this position under review.

Darren Philp, director of policy and market engagement at The People’s Pension, and Morten Nilsson, chief executive of Now: Pensions, both railed against the decision, citing the number of smaller employers who have stated they will not take advice.

Mr Phelp said: “The Pensions Regulator’s anti-competitive stance will limit choice for smaller employers and is a further leg up for the government-subsidised provider.

“The regulator needs to urgently think again if it wants employers to have real choice and avoid fundamentally distorting the market by only signposting Nest.”

Mr Nilsson cited research carried out by The Department for Work and Pensions showing that around one in five small and micro employers will not seek advice on auto-enrolment and will be making their own pension scheme decisions - equating to around 290,000 employers.

Of those that intend to make their own decisions, around one in ten do not know how to select a scheme or think it will be difficult - equating to around 130,000 employers.

“It’s a great pity that despite the majority of consultation responses being supportive, TPR encountered obstacles that meant it was unable to find a way to get this pragmatic initiative off the ground.”

The consultation started late last year around a list to address the risk of non-compliance amongst employers struggling to find a scheme, particularly those employers that do not intend to seek an adviser to help them.

The majority of responses were supportive, according to TPR, but the feedback also presented “significant challenges” relating to setting objective entry and exit criteria that could be applied fairly and evenly to schemes.

Several respondents pointed out the difficulty in articulating criteria for universal acceptance of all employers, regardless of size, while there were also concerns that some suitable schemes operating reasonable terms and conditions could end up being excluded.

The regulator argued that without commonly agreed criteria, it would be difficult to manage a list in an objective and transparent way, providing appropriate levels of scrutiny.

peter.walker@ft.com