Auto enrolment has been grabbing a number of headlines over the last month as the very largest employers have started to implement it. They have either had to demonstrate that they have a pension scheme in place for their employees, which satisfies the qualifying criteria, or auto enrol their employees using NEST.
Recent reports highlighted the stance of one provider who is not allowing employees to be auto enrolled into schemes described by Steve Webb as “lousy high charging old schemes”.
This has left Andy Zanelli, AXA Wealth’s head of retirement planning, with two very important questions:
“My first question is who is taking the responsibility for not allowing this member to join their employer sponsored pension scheme? I wonder how this stance reflects the principles of Treating Customers Fairly as I have come across many older employer sponsored pension schemes where the employer contribution is well in excess of the levels demanded by NEST. I also wonder how the employer feels about this decision?
“My second question is to Steve Webb and his fellow MPs who are ultimately responsible for what I believe is a great, and much needed, initiative to boost retirement savings in the UK. At times of great need, such as the current economic situation, leaders should lead by example and not just ‘manage’ the situation. Why don’t our MPs back NEST by closing the current Parliamentary Contributory Pension Fund (and the Supplementary Section for Ministers etc.) and enrolling themselves?
“There are many benefits to this course of action with the main one being the fantastic endorsement of this critical policy by our political leadership. Another could be that MPs may not be enrolled in a “lousy high charging old scheme”, yet I cannot be sure on this point as I could find no mention of the costs of running this scheme on the parliamentary website. A further benefit could be the benefit to the Exchequer who I believe provide funding as the ‘employer’ somewhere north of 25%, contributions ultimately paid for by the taxation of the companies and individuals – the very people being encouraged to contribute to NEST themselves!
“Actions speak louder than words, so surely taking this course of action makes sense?”
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