This is as close as I can get to a verbatim conversation I had on the phone with the head of a small practice of accountants yesterday-it is edited to concentrate on the core issue she had – what she could do for two of his clients who were using workplace pensions which she was worried were not compliant. I record calls and just for on this occasion I’m glad I did as this highlights some important issues for accountants, IFAs, insurers and most importantly our mutual clients.
Practitioner
I’m pretty sure my clients are or will have a pensions issue….they have GPPs, the charges are 0.8% pa for those in work and 1.3% for those who’ve left and the insurance company are paying commission to an adviser. I’m told they can’t pay more than 0.75% next year. Is that right.
Me
The proposals are to introduce a charge cap from 0.75% for April 2015.
What is the adviser telling your client?
Practitioner
Nothing, the adviser has merged into another firm and the new firms are referring the matter to the insurer
Me
Have you spoken to the insurer?
Practitioner
I’ve advised the client not to deal directly with the insurer because they aren’t authorised, obviously I can’t advise my client and in any event the insurer won’t speak to me as I’m not FCA registered.
Me
You are able to advise your client as long as you keep the conversation on a B2B basis. I’ll read you what the Regulators are saying about this
Practitioner
Ok – so what can I do to help my client?
Me
Tell them firstly there’s no need to panic. The insurer of the GPP will be obliged by 2015 to reduce the charges to 0.75% for both those who are working and those who’ve left. If they don’t – you’ll probably have to find a new provider from then.
If your client’s advisers won’t sort this out (and they are currently being paid by the members through commissions) then you can find new advisers, pay your old advisers a fee or talk with the insurers (on a B2B basis) about changing the arrangement to a direct offer basis where the insurer deals with you directly.
Having said there’s no need for panic, your clients need to be on the front foot here if they are not to find themselves at the back of the queue this time next year
Practitioner
I think my clients may find the third options sounds the best – will the insurers agree?
Me
Probably! Insurance companies know that they won’t be able to pay any more commission to advisers on workplace pensions beyond April 2016 and many are setting up to deal with employers like your clients on a “direct offer” basis. Some aren’t there yet.
Practitioner
Ok, so what happens if we can can’t get the insurance company to take on the job and we can’t get the IFA to help us?
Me
The IFA has an obligation to treat customers fairly and so has the insurer. This is one of those situations where it is best to remind everyone of that!
Practitioner
Can you help?
Me
I can help you this far, if you find you cannot get resolution and you feel you have no option other than to find a new provider going forward you can use http://www.pensionplaypen.com but we strongly advise you to try to get things sorted using your current arrangements. The disruption of starting again is substantial and it is probably in your member’s interests to sort things out without having to engage me.
Practitioner
That sounds very noble of you!
Me
It’s me being pragmatic, there are literally thousands of employers waking up to the implications of the 0.75% charge cap, the abolition of commissions and the end of active member discounts. We do not have time and people to help so many companies and don’t want you to waste your time and money on advice you don’t need.
We have more than enough to do without competing with existing advisers!
But if you want to come back to us when you’ve had these conversations, then we can help you get yourself a new pension and we can keep you informed of what employer duties will be regarding these workplace pensions.
You’ve probably noticed a few “probablies”! That’s because we still haven’t seen the final legislation governing when and how the new rules will be applies. So the best we can do for you now is to put you and your client’s in the picture of what is likely to happen.
Practitioner
When will you know more?
Me
The Queen’s Speech on Tuesday (3rd June) may have a Pensions Bill containing primary legislation, the small print (secondary legislation) will likely be published in October. The Government have put back a lot of its proposals a year already but we think it is pretty keen to make sure this lot is in place this parliamentary term which means they have to get this sorted shortly!
Practitioner
This is a bit of a mess isn’t it!?
Me
It is- even the Pensions Minister publicly admits this should all have been sorted when auto-enrolment was being regulated. But we are where we are and if there’s one thing your client can take some comfort in- it seems you do want to treat your customer fairly!
Practitioner
My clients pay their fees, that’s what matters most! But you’re right, my long-term success and that of my practice depends on our giving the right advice when I can and if nothing else- you’ve helped me do that.
If you are concerned about the state of your client’s pensions, or indeed your own firm’s – feel free to contact me (henry.tapper@firstactuarial.co.uk ) or 07785 377768.
You may want to register yourself at http://www.pensionplaypen.com/register .
