Pension providers are rejecting auto-enrolment schemes they do not wish to administer, and advisers have claimed the situation will be worse for the smallest firms entering AE.
According to research firm Defaqto, which carried out a survey of advisers on behalf of provider Now:Pensions, more than three quarters of advisers anticipated that more pension providers would not offer their auto-enrolment schemes to businesses with fewer than 30 employees.
Morten Nilsson, chief executive of Now:Pensions, warned: “For many providers, the effort involved in administering these schemes will not be worth it.
“Widespread cherry picking is already occurring, but as smaller firms reach their staging dates, it’s likely that a growing number of providers will close their doors altogether.”
More than 60 per cent of advisers surveyed expected to see a growing number of pension providers introducing an employer charge for auto-enrolment, with 69 per cent claiming that a charge would not necessarily deter them from recommending a scheme.
Anna Sofat, founder and managing director of London-based Addidi Wealth, said: “I am not surprised by the figures Now:Pensions has cited. The market will probably become polarised as a result – we need to be mindful of that.
“It will be interesting to see what happens as a result of auto-enrolment. The business will be concentrated in a minority of companies, which already appears to have happened in Australia.”