50% charges on auto enrolment pension?

Malthusian

Ex_Gas_Guzzler wrote: »

They know about it, he said it was to cover their costs to set it up

Meaningless. All charges for anything are to cover the seller's costs. These particular charges are not allowed under auto-enrolment regulation. Any adviser should have known that. I really doubt that St James's Place management and compliance knew all the details, they have their faults but blatantly breaking the rules to this extent is not one of them.

The whole thing stinks. The employer could have set up an auto-enrolment pension with Nest which was set up by the Government and has a statutory obligation to accept any employer, even if it isn't commercial. Their charges are 1.8% of every contribution and 0.3% per annum, which is not great, but it does comply with the auto-enrolment charge cap.

It is not plausible that he is charging 0.5% on growth per annum, it is far too low and would never cover costs. Performance fees are more typically 15-20% of growth in excess of a benchmark. However, an auto-enrolment scheme would not use a performance fee because it would breach the charge cap as soon as you had a good year of growth. (*belated edit* - technically true but in fact any kind of performance fee structure is not allowed under auto-enrolment charging rules.)

atush

Ex_Gas_Guzzler wrote: »

I have a colleague who enrolled a few months back they have been paying 50% and now keen to know if that was will be refunded

How far back should this go?

Anyone who signed last week is ok
The commission is now just .5% on growth pa

Back to the beginning as far as I can see. They are charging an illegal amount.

Ex_Gas_Guzzler

sandsy wrote: »

Commission is not allowed. What is this 0.5%? What do you get for it?

You get to see the Ifa once or twice a year and get advice if not you have to deal with any changes etc yourself

dunstonh

Ex_Gas_Guzzler wrote: »

You get to see the Ifa once or twice a year and get advice if not you have to deal with any changes etc yourself

Don't tell me he is making out he is an IFA? SJP are tied sales agents of SJP. Not IFAs.

Has he actually said anything truthful to you yet?

Malthusian

So, let's just summarise where we are:

- Said he was going to charge 50% of first year's contributions - which is banned, and also an absolute rip-off unless you stay with the company for more than ten years, which very few people do nowadays
- Is now lying about the charges (0.5% of growth, even in a good year, would be £35 on a fund of £100,000 - and hardly anyone is ever going to have £100,000 in an auto-enrolment scheme)
- ...and is still flagrantly ignoring the rules on auto-enrolment charging (performance fee structures are not allowed)
- Claims to be an independent financial advisor when he is not (also a flagrant breach of FCA rules)
- Claims that SJP compliance are aware of this - I can tell you they aren't (the IFA thing is rather typical for SJP advisers but not the flouting of auto-enrolment charging rules, I hope)
- Possibly claims to be taking commission instead of a fee, also not allowed (although in fairness this could be the OP's confusion)

At a minimum I would be calling the administration department for the pension (*not* the adviser) and telling them that I do not want this adviser to have any servicing rights on my pension, any right to obtain information or any right to deduct fees or commission.

What is your employer's connection to this person? There must be some reason why he is allowing him to "advise" on this scheme and make illegal deductions from his employees' pension funds given that he could have set up a scheme with NEST instead.

d70cw6

the adviser is the company boss' cousin.

dunstonh

I think its time to refer this case to the pensions regulator. Although going direct to St James Place and voicing your concerns with them is probably the quicker option.

xylophone

Have you discussed this with TPAS?

The see http://www.thepensionsregulator.gov.uk/individuals/reporting-a-concern.aspx