Businesses urged to plan now to avoid extra pension scheme charges
That’s the advice from leading Preston-based financial advisory group, Taylor Patterson.
Two major changes in the financial services industry - the Retail Distribution Review (RDR) and compulsory workplace pensions – will come together to mean new costs for those that set up a company pension scheme from 1 January 2013.
RDR, which will be implemented from New Year’s Day, aims to make the financial services industry more open and transparent.
As a result, companies and individuals will have to pay their financial adviser up front, rather than the financial adviser getting paid through commission from the provider of a particular product.
Whilst this will mean no hidden charges for customers, companies that want to set up or amend an employee pension scheme will have to act before the January 1 deadline to avoid having to pay these upfront fees.
This is particularly relevant now as last month the government brought in new rules around workplace pensions.
The changes meant that, eventually, all employees will have the right to be enrolled in a contributory pension scheme.
The dates by which the workplace pension scheme rules come into force vary, dependent on the size of the company, with the largest required to be compliant last month.
Paul Jackson, employee benefits manager at Taylor Patterson, said: “By acting before RDR is implemented in the New Year, companies could see a real saving in the administrative costs to set up or amend a pension scheme.
“For businesses that are due to be affected by the workplace pensions rules within the next year or so, this could mean a worthwhile saving, dependent on their pension running costs.
“Employees themselves could also benefit as acting before RDR begins could mean lower on-going pension running costs, too, costs which are inevitably absorbed by the members of the scheme.”