If you are an employer then things are about to change….
Not only will all employers be required to offer a pension for ALL employees from 2012, they will be required to make employer contributions and automatically enroll all their employees into a pension scheme.  Those employers that do not want to create a company scheme with be able to use the default Personal Accounts.

Employers who already offer a pension (or are thinking of it in leiu of Personal Accounts) should take heed. The latest FSA proposals bring the group personal pensions (GPP) market in line with the proposals of the Retail Distribution Review (RDR) – advice on GPPs should be paid for on a fee basis, even if employees receive no individual advice.

It is the employers who will need to arrange to pay an upfront fee to an adviser, or arrange for employee pension funds to be deducted in order to pay for any advice taken.  This will have a huge impact on current GPP arrangements.  Given that employer pensions (with employer contributions) will be compulsory for all employees this could be minefield.

The FSA has provided some guidance in this instance.  It says a form of adviser charging, called “consultancy charging”, will become the remuneration method for those advising on GPP business. However it will not be possible for advisers to “work around” the rules banning commission – the “consultancy charging” fees will be taken whether the employee receives any individual advice or not.  The FSA says: “Unlike our proposals for adviser charging related to other investments outlined in CP09/18, consultancy charging will apply regardless of whether the end investor receives advice, as we are focusing on the service to the employer.”

Any existing GPPs will be unaffected – advisers can continue to receive commission from these.  This will apply to new scheme members. However, the FSA will monitor the market closely in the run-up to 2012, to ensure GPPs are not recommended to employers who would be better served by Personal Accounts, in order to obtain commission.

As fee advisers we have been offering a fee only serives for many years and have been wholly fee based since May 2005 – we do not take commission.  We can offer advice, answer any concerns or provide further information.  For more information contact us on enquiries@rw-fas.co.uk