50% charges on auto enrolment pension?

Ex_Gas_Guzzler

Our pension advisor appointment was arranged for me today at work

To join the scheme the minimum I can put in is 3% and the company will put in 3%, I thought the minimum was 1% but I was told our company has set the minimum as 3%, the advisor made a call in front of me to confirm it with his office. The form I signed had the % left blank, I asked about it and he said he would fill it in afterwards

He also made me aware that I would be charged a fee of 50% in the first year rather than 10% per year for 5 years

I just wonder if what I have been told sounds correct

Many thanks

dunstonh

50% charges on auto enrolment pension?

Not allowed.

o join the scheme the minimum I can put in is 3% and the company will put in 3%, I thought the minimum was 1% but I was told our company has set the minimum as 3%

Again, not allowed. However, they can insist that you pay in more to get a greater matched contribution from them. However, the base minimum rules apply. So, could the 3% from them be what they were referring to as requiring you to put in 3%?

He also made me aware that I would be charged a fee of 50% in the first year rather than 10% per year for 5 years

You cant be charged any initial charge. Plus, 10% for 5 years is also in breach of the retail distribution review.

sandsy

Did you explicitly agree to receiving and paying for personal advice in relation to your work pension? Was it personalised to you, your circumstances, your attitude to investment risk etc? Were there recommendations on how to invest your money in the pension? Did you agree to any charges for such a service before receiving the advice?

Or was this generic information available to everyone with no personalisation for your circumstances, no advice on what funds to use inside the pension?

If it was the former, there may be charges for the advice over and above the maximum charges allowed for in an auto-enrolled pension (0.75%pa of funds the pot) but you must have explicitly agreed to such a service.

If it was the latter, you should never end up paying more than the maximum auto-enrolment charge.

molerat

The next mis-selling scandal looms !

greenglide

Is it not that the %age left blank is intended for the employee to opt for the lever they want to pay (up to 3% matched by the employer?) with a minimum of 1% but the advisor has failed to communicate this?

It sounds as if he doesnt know what he is talking about.

Malthusian

dunstonh wrote: »

You cant be charged any initial charge.

Don't Nest charge 1.8% of every contribution?

But that said, there's an obvious difference between 1.8% and 50%, and 50% or 10% per annum for five years would be so flagrantly illegal that I wonder if the OP hasn't misinterpreted something (and/or the adviser has explained it incredibly badly).

Except that "The form I signed had the % left blank, I asked about it and he said he would fill it in afterwards" sounds really dodgy. You must know what level of contribution you want to make, what possible reason could there be for you to not just fill in a 3?

At this point we would usually be telling you to make the maximum contribution that your employer would match as otherwise you're turning down free money, but you need to get this business cleared up first.

OP, it would help if you got hold of the charges in writing (they must have issued you with some sort of scheme booklet) and told us exactly what they said.

dunstonh

Don't Nest charge 1.8% of every contribution?

That is not an advice charge.

But that said, there's an obvious difference between 1.8% and 50%, and 50% or 10% per annum for five years would be so flagrantly illegal that I wonder if the OP hasn't misinterpreted something (and/or the adviser has explained it incredibly badly).

I wonder that as well. It breaches AE rules and RDR rules as described. So, I do wonder if it is a misunderstanding.

There are some ad-hoc charges allowed against AE schemes but initial advice charge for setting up the scheme is not allowed. When RDR came in, the maximum period for allowing an initial advice charge to be paid in instalments was 12 months. This was extended last year IIRC. I cannot remember what the extension was. Maybe 2 or 3 years but not 5. I have searched for info on the change but cant find any.

Ex_Gas_Guzzler

Have checked with colleagues who have also paid 50% in first year as costs and charges.

It isn't a misunderstanding.

There are also other colleagues who are being auto enrolled now so they too are keen to know where they stand

I am really concerned that we are being deceived

greenglide

So which pension provider are you being auto-enrolled with?

NEST, Now: Pensions, Peoples Pension ????

Ex_Gas_Guzzler

St. James
Although as I said I have no paperwork

xylophone

St. James

St James's Place? For a basic auto enrolment pension? Why?