Now: Pensions is paying advisers between £1 and £2 per employee to communicate the benefits of auto-enrolment pension schemes they put in place.
The provider says it has confirmed regulatory approval of the payments, which are not seen as commission by the FSA and are therefore permitted by the FSA. It adds that members are not paying for the payments because they are paid for out of its marketing budget.
Under the arrangement, Now: Pensions pays advisers for delivering basic financial education agreed with employers. It also provides a toolbox of material, including a worksite presentation, leaflets and supporting material which is supplemented by material produced by the advisory firm.
Aegean withdrew an offer to pay half an employers’ first three months contributions on January 1, 2013, day after the Retail Distribution Review took effect.
Morten Nilsson, chief executive of Now: Pensions says: “We have checked this out and are comfortable these payments are within the rules.
“Today a huge proportion of the population is completely disenfranchised from any advice. Many people generally don’t save any money unless a solution is presented to them as part of their workplace conditions. So it’s really important that, if they are to fully benefit from auto-enrolment, they have access to at least basic education.
“The logical place to do this, given that schemes will be selected by the employer, is in the workplace. And since many advisers have built their business around member engagement and communication, they are best equipped to do this.
“The adviser is not ‘working for Now’ – we are agreeing to fund activity that is only available after the provider selection process has been completed. They will remain independent of Now, but we will educate them in the Now proposition features. Also the members are not paying for this service. We are funding it out of our communication budget as part of the service we deliver. Our driver is to help employers and employees make better decisions that will ensure they are in a position to be able to build healthy pensions for their retirement.”
Speaking at the launch of the offer last October, Dick Strattan, H&B head of development – EMEA at Mercer, said: “Mercer welcomes this innovative initiative which should greatly help employees to grasp the importance of saving for retirement and to decide sensibly between the choices available to them.”
James Biggs, head of employee benefits, Lorica, said: “Lorica strongly welcomes this initiative. Our whole proposition tackles the daily challenge that employers have in engaging employees on all of their benefits. In a pension market where extra cost burdens are coming in the form of auto enrolment and the removal of commission from the providers, it is refreshing that new players in the market are happy to work in partnership with us to continue engaging and educating. To this end, we will happily work in collaboration with Now: Pensions.”