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The cap somewhat ignores the fact that employers and/or employees can be charged extra, such as for administration.

Advisers should be careful to include these extras within their assessments.

It is worth noting that Defaqto data informs us there is little correlation between charges and performance.

How advisers can help employers meet the Equality Act standards

This is probably one of the most useful opening gambits for advisers.

AE guidance provided by TPR suggests employees that meet specific definitions can be excluded from the process.

However, these exclusions potentially meet the definition of ‘indirect discrimination’ as defined by the Equality Act 2010 and therefore by following the guidance an offence may have been committed.

The Equality Act defines ‘indirect discrimination’ as when an organisation's practices, policies or procedures have the effect of disadvantaging people who share certain ‘protected characteristics’.

Examples of ‘protected characteristics’ include age, disability, sexual orientation, marital status, pregnancy/maternity, race, and religion.

Employees affected are most likely to be low paid and/or working part-time, and according to the Office for National Statistics, these tend to be female and/or disabled.

It is easy for an adviser to help employers avoid this issue, all they have to do is ensure the employer treats all of their employees and their salaries equally.  

We will now look at the AE exclusions and how they introduce discrimination so advisers can avoid them:

Retirement options

Defaqto data illustrates how providers currently facilitate retirement income:

Pension freedoms came as a bit of a shock to some providers.

Overnight they were expected to change from being a savings vehicle to facilitating income payments. While no master trusts facilitated FAD seven years ago, 65 per cent do today and we expect this number to increase further.

Advisers should look beyond the headline options and consider the suitability of the retirement options.

For example, are there costs and risks in moving from accumulation to decumulation?

Payroll is more important than the pension 

For many employers, payroll compatibility was one of the most critical selection criteria.

This is because scheme selectors often worked in HR/payroll and wished to avoid administrative problems when moving data between the employer, payroll, and pension provider.

For small employers the most prudent solution is usually to log onto the pension provider's website and tap in the required data.

For medium and large employers, manual inputs are an expensive and laborious activity fraught with the possibility of errors.

Therefore, using a solution where the databases can instantly exchange data is a significant benefit.

Advisers who can identify improvements in the method used to exchange data will most certainly add value.

The impact of APIs and fintech