Workplace pensions provider Now:Pensions has proposed charging employers a maximum monthly service charge of £40 as part of a consulation to give small employers the opportunity to say exactly what they want and need from their auto enrolment provider.
Using feedback from the consultation, in January 2016, Now:Pensions said it will “enhance” its proposition to specifically meet the needs of smaller firms.
For firms stating from 2016 onwards, there will be a monthly service charge of no more than £40 per employer, however the exact level of the fee and nature of the proposition will be determined following the conclusion of the consultation.
The launch of this charge will not apply to any firm that already has an accepted contract with Now:Pensions even if they are staging in 2016 or beyond.
Now:Pension’s new proposition is likely to include online support such as screen share and live chat, longer contact centre opening hours (evenings and weekends) and a named individual to support employers with any issues that may arise, following initial conversations with employers and their advisers.
Now:Pension’s move follows that of Standard Life, which charges employers a monthly fee.
In April last year, Standard Life announced it will introduce a ‘scheme management fee’ of £100 per month for smaller employers with modest contributions who have previously agreed terms with the provider that are above the 0.75 per cent scheme charge cap.
According to figures from The Pensions Regulator, of the 1.8m employers yet to stage from now until 2018, 1.2m employ between one and four workers while 16 per cent (288,000) employ between five and nine workers and 17 per cent (306,000) employ between 10 and 49 workers.
More than 500,000 firms will stage in 2016 alone.
Morten Nilsson, chief executive of Now:Pensions, said: “We want to keep the doors open for everyone and provide the right support but the market is becoming more challenging and we’ve been giving careful consideration to how we maintain this promise on a sustainable, commercial basis.
“Unlike the companies that have gone before them, most small businesses do not have any in-house pensions expertise, they are also less likely to have the benefit of an adviser. As a result, smaller companies will undoubtedly need more guidance, not only as they go through the staging process but also on an ongoing basis.
“We want to offer all firms, regardless of their size, the help they need but to do this we will need to charge for our services. This consultation will pinpoint exactly what small employers want so we can develop our proposition to precisely meet their needs.”
The consultation runs from 17 September until 29 October. The outcome of the consultation will be published before the end of the year.