The company said current proposals for the funding of the free pensions advice service do not “cast the net widely enough” by excluding workplace pensions, as the scheme will benefit many plans which provide retirement income facilities.
“The current proposal for the guidance guarantee levy is to raise it from the firms that will potentially benefit from the retirement guidance service,” it said. “Due to auto-enrolment, the vast majority of defined contribution provision will be through workplace trust schemes.”
It added that FCA-regulated providers who also administer occupational schemes should be able to opt out of the additional pensions levy amount so that they don’t end up contributing twice for the service.
Head of UK proposition marketing at Old Mutual, Tom Hawkins, added: “Trust based schemes, regulated by the Pensions Regulator, will also benefit and should pay towards the service via the pensions levy.
“Including trust-based schemes will mean a more proportionate method of funding the guidance guarantee.”
Announced as part of the chancellor’s spring Budget in March this year, the guidance guarantee looks to ensure all consumers have access to advice before they begin taking their pension.
It comes as a result of pension reforms that were also introduced in the Budget, which will remove the requirement for retirees to purchase an income stream, whether that be an annuity or through phased drawdown, from April next year.
In July, the Financial Conduct Authority (FCA) published a document called “Retirement Reforms and the Guidance Guarantee” which stated that the Government believes the service “should be funded by the firms that are likely to benefit from more engaged consumers” and would leave the regulator to establish an appropriate levy on regulated financial services firms.
The regulator subsequently proposed a fee block-based £20m levy which includes charging portfolio managers around £10m a year and managers of investment schemes or pensions schemes just £1m.
The Association of Professional Financial Advisers has previously estimated that the annual cost of providing the guidance guarantee service will be £10m to £15m, with advisers paying between £4m and £6m of the Financial Conduct Authority’s proposed £20m annual levy.
It added that this was “unfair on advisers”.
