Time to take a stand

As spring moves into summer the corporate advice sector can reflect on good progress having been made in some quarters, while other areas have seen issues highlighted that need more attention.

As Edmund Tirbutt reports in this issue, service standards in the group risk sector, for far too long the bain of the lives of those advisers specialising in the sector, are now finally turning a corner.

In the area of workplace health we have also seen progress in the public debate with Lord MacKenzie expressing his support for getting health and wellbeing on to the balance sheet, something I called for in this magazine last month. Lord MacKenzie has stopped short of calling for such a policy to be made mandatory however, but at least the subject is back on the agenda. The industry should make sure that this issue is kept alive.

The very good news in the pension arena is progress on auto-enrolment. Now European Union approval for auto-enrolment into workplace personal pensions has been received advisers can start having sensible conversations with employers about preparing for the additional costs that 2012 will undoubtedly bring.

But there are also problems with the operation of workplace personal pensions which have come into the open since the last issue of Corporate Adviser was published.

The parliamentary committee on public accounts found the Pensions Regulator wanting in its regulation of defined contribution pensions. The MPs’ report referred to the lack of information held about schemes, but there are other pressing issues for workplace personal pensions which need to be addressed, and TPR should, and no doubt will take a lead.

For example, as reported in this issue, there is the plight of higher rate taxpayers in contract-based DC. Standard Life estimates that perhaps more than one in two higher rate taxpayers are not getting the higher rate tax relief to which they are entitled. If this is the case, this is a blemish on the records of employers, advisers and in the Pensions Regulator. If such a high proportion of employees are missing out on 20 per cent of their pension contributions then you could argue that contract-based DC is a flawed product and advisers should not be recommending it. If you can’t trust employers to communicate reclaiming higher rate relief properly, which they aren’t, then should you recommend it?

Most good advisers’ clients do notify scheme members of their obligations, but there are clearly many that do not. The industry should lobby for contract-based DC schemes to be put on the same basis as trust-based ones where higher rate taxpayers get tax relief automatically. Personal pensions have historically been treated differently in this area because they were originally sold to self-employed people. However they are now becoming the mainstream occupational pension scheme and need to be treated as such for tax purposes. Why should you even have to go to the hassle of claiming back tax relief just because your scheme doesn’t have a board of trustees?