The PLSA are on the money here. The General Levy will end up being paid for by ordinary savers of large workplace pensions .
NEST has 7.5m of them, Peoples Pension has 4.5m NOW has 2m of them , Smart has 0.5m of them. The 10% increase in the General Levy will stop these organisations introducing innovation and bringing down charges.
Darren Philp of Smart Pensions is quoted in Professional Pensions stating
“AE schemes should not be seen as the cash cow paying for increased regulatory costs,” he said.
“Short term, sticking plaster solutions are not what’s needed when it comes to the future of the levy – the promised review needs to look fundamentally at the costs of regulation and where those costs fall.”
“To fill a black hole of its own creation, the DWP is hitting hardest at those providers that are in the vanguard of delivering AE and this levy increase has a disproportionate impact on those providers serving low to moderate earners.”
“We need proper scrutiny of regulatory expenditure and a revised levy formula that is fairer across the industry.”
The People’s Pension (TPP) agreed AE savers “disproportionate” share of the levy payment made a full funding reform crucial.
The AE provider said:
“As the levy is calculated per member, AE master trusts – whose members are likely to have lower earnings and multiple smaller pension pots – are left paying a disproportionate share of the charge compared to the assets they hold.
“Just ten master trusts will pay 25% of the total general next year, despite only holding 2% of the assets across occupational pensions.
The 10% increase in the General Levy is to pay for the Pensions Regulator (TPR), the activities of The Pensions Ombudsman (TPO) and part of the activities of the Money and Pensions Service (MaPS).
This is an awkward week for the third of those bodies which is up in front of the freshly reformed Work and Pensions Select Committee with the excellent Stephen Timms in the Chair.
The WPSC will be asking questions about the pensions dashboard’s progress on Wednesday morning. I hope that they will also ask MaPS what value the public is getting for its money.
My views are plainly stated on this blog. MaPS is not – in my opinion – doing enough work. It is spending too much time strategising and too little time focussing on getting the data standards the dashboard needs as its foundation – in place.
If we are to pay for tPR, the Pensions Ombudsman and for a portion of MaPS out of this greatly increased levy, we should expect more action and less waffle.