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NOW: Pensions unveils AE charge

18th Sep 2015
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Automatic enrolment provider NOW: Pensions has introduced an employer service charge of up to £40 a month from next year.

Existing NOW: Pensions customers will not be affected by the charge even if they are staging in or after 2016.

At the same time the workplace pensions provider is launching a month-long consultation aimed at finding out the needs of small employers and will use feedback from the consultation to set the new fees.

The new proposition is likely to include online support such as screen share and live chat, longer contact centre opening hours and a named individual to support employers.

Concern continues to grow that those firms yet to stage will have to turn to the government-backed NEST scheme as other providers struggle to make money out of smaller firms.

NEST is not currently planning to introduce a similar fee although it already charges the employee 1.8% up front.

According TPR figures, of the 1.8m employers yet to stage from now until 2018, two thirds employ between one and four workers while 16% employ between five and nine workers and 17% employ between 10 and 49 workers.

More than 500,000 firms will stage in 2016 alone.

When it comes to selecting a provider for AE one in four employers intend to seek help from their accountant.

The NOW: Pensions consultation runs from 17 September until 29 October and the outcome will be published before the end of the year.

Now that NOW: Pensions has broken ranks, will People’s Pension follow suit?

AccountingWEB has launched the No-one gets left behind campaign to alert as many accountants as possible to the obligations implied by auto enrolment. Read our simple eight-point statement which sets out the auto enrolment facts you need to know.

Replies (11)

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Stephen Quay
By squay
18th Sep 2015 16:12

Disappointing development

Having invested a lot of time in learning how to use their microsite, attending their webinars, etc, surely there will be no additional burden on them as we shall be providing the complete payroll AE service to our clients. 

We have one client already signed up with Now and about to stage in two weeks. As I understand it the charge won't apply to them. But we have a few clients staging next year who didn't need to sign up yet. We were waiting until later this year to set them up with Now but it would appear this new charge will apply to them. They won't want to pay it so we may have to look at NEST or something similar. It would be a shame not to have all the clients on the same system. We shall have to learn another system all over again. I thought we had AE all sorted.

I have just emailed our contact at Now and waiting for a reply. I'm very disappointed and frustrated by this development.

Thanks (1)
By RichardH121
18th Sep 2015 17:21

This will be very interesting to see if this £40 per month is the starting fee or if it is a one off fee applied to employers no matter what size their payroll is. Also how many others will follow......


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By puzzel
18th Sep 2015 19:26

Bad news

When a small business has to pay the extra for a pension scheme, and then they go on about a liveable wage.

Makes you wonder if some small businesses might set a pension scheme other than through AE but is AE compliant? a private pension for the employee.

Contract of employment agrees the pension deductions for the employee and a contribution from the employer, to be paid to the employees required pension provider.

May sound a lot of work, but for the amount of employees (1/1) then their would be a saving.

Those businesses enrolling later are being punished for something that the government has enforced.




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By Henry Tapper
20th Sep 2015 15:47

Getting what you pay for?

My conversation with NOW on this was about what the employer and member got for their money.

NOW is investing in a new support centre creating 250 jobs. During the consultation, we'll be finding out what £40pm buys you and whether it might be value for money.

Clearly it hits the smaller company harder but it's nowhere near as high as Standard Life (£100pm) and could prove a helpful alternative for employers who have complicated arrangements.

NOW needs to get it's relationship with it's third party administrator working for a few months but it continues to offer a strong investment proposition, is well Governed (only it and People's have the Mastertrust Assurance Framework in place) and it has a strong covenant from its Danish parent.

I don't agree with the one provider fits all approach which assumes all pensions are the same so "stick with what you know" - better to offer choice but ensure that the choice is relevent to your software and processes.







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By [email protected]
22nd Sep 2015 16:26

AE is not a free service from anyone.....

NOW:Pensions may be about to introduce a fee for their support but even before this was announced it cost money to set up a NOW:Pension scheme.

The accountant mentioned above spend time and money investing in the process and presumably passed on those costs to his clients when they were assisted with the process?

A client that did it themselves spend time sorting it all out and time costs money as this is time that could have been spent making a profit for the small business.

I know that additional cost for small businesses is never welcome and understandably so but this is not additional cost it is the same cost charged in another way. Assuming NOW deliver support with implementation and assessment within this cost then this will be £40 well spend I feel?

Other providers charge far more than £40 as has been demonstrated above and those that do not (yet) have an explicit charge may not be in a position to assist as comprehensively in future. You pays your money and makes your choice I feel??

Chauffeur driven or hire car either way there is cost but one you have to drive yourself. 

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By garethwestwood
29th Sep 2015 22:51


As with the first commenter, we based our cost effective offerings around this. I have completed the survey and offered to attend the focus group 200 miles away for £75 which will cover petrol and nothing more, that is how strongly I feel about it. 

As stated in the survey I feel hoodwinked. Nest WILL offer this for free, and having used it for 300 employees when I worked in industry, I have first hand experience that Now Pensions service is not substantially more impressive to justify the charges. £40 per month for a 2 employee business?

I have told them I will be cancelling all clients so far set up and would fight any cancellation charges (there is a 2 year tie in the original smallprint) as I have no intention of working across more than one pension provider for our payroll bureau offerings, and will not use this £40 per month service at all.

I would expect a substantial reduction for employers who use services such as our own as we are doing the work for them.

Whilst I am still on my soapbox, Nest systems offer so much more flexibility allowing me to change individual contributions per employee, but with Now, this involved human interaction for a bespoke scheme, simply to have owner managed businesses able to have the employer pay the employees contributions.

Of course, I only found this out after having already signed up my first client.


Rant over, for now...



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By [email protected]
30th Sep 2015 08:37


For existing employers with a current NOW Pensions offering nothing has changed. My understanding (direct from NOW) is that any changes will not be retrospective so how can you unilaterally move all of your clients existing schemes, what justification can their be?

What about the poor employees that you affect when you do this?

"I have told them I will be cancelling all clients so far set up and would fight any cancellation charges (there is a 2 year tie in the original small print) as I have no intention of working across more than one pension provider for our payroll bureau offerings, and will not use this £40 per month service at all

Surely a contract is a contract...enforceable in law. Maybe this is something that needs to be reviewed at the two year point when teh market has settled down and there would be no need for useless arguments about a legally binding contract that the client has signed....not you.

Switching to NEST may also cause problems as the NOW clients will be left with a pot in NOW that CANNOT be moved to NEST until at least 2017 so you create confusion just because you are upset that NOW have become commercial.

Maybe some time for thought and reflection is needed rather than a knee jerk reaction that will have ramifications for all those clients affected....that you set up in the first place....

Maybe this might also be a good time to review whether you should be involved in pension selection at all?

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Replying to DJKL:
Stephen Quay
By squay
30th Sep 2015 12:17

Who You Gonna Call?

<a href="mailto:[email protected]">[email protected]</a> wrote:

Maybe this might also be a good time to review whether you should be involved in pension selection at all?

Our few payroll clients don't know anything about AE, they hadn't even heard of it until we mentioned it. They just want us to sort it out (with the payroll) and make it go away. When discussing choice of pension provider with them we get comments such as "whoever you choose that's fine by me". We would rather not be involved with AE but it's been forced upon us by the Government. If we don't deal with it who will? We have built up trust with our clients over many years and provide all these services they need. We don't have a choice but to be involved. Having researched and chosen a suitable pension provider as a solution to a problem (I do not see this as an opportunity to make money as some pundits would have us believe) it's a shame Now Pensions have Now moved the goalposts. It won't effect our client who has already signed but we may now have to consider NEST for the smaller clients staging in 2016. It's a great shame because I would rather not have to learn another system as #garethwestwood rightly points out. One wonders whether Now planned to introduce this charge all along with the intention of "losing" many of the less profitable smaller clients staging in 2016 and beyond

PS. My email on 18 Sep (mentioned in my earlier post) was never answered.

Thanks (3)
By [email protected]
30th Sep 2015 13:19

Legal stance....

There is no legal reason why an accountant, or anyone else for that matter cannot advise/recommend a scheme to a corporate client. This is not regulated activity and no recourse will result even it it really goes wrong (in the eyes of The Regulator).

However many of the bureaux that we deal with have contacted their PI insurer and asked whether they would be covered in the event of a client compliant in this area...the answer has been a resounding NO.

There are so many complexities to cover off with a client when selecting their pension scheme all of which The Regulator has recently tried to address on its website (again useful but no quite the full monty).

Tax relief comes up time and time again as a sticking point as where a client could be persuaded that an accountant would not understand all there is to know about pension they might reasonably be expected to know about tax (fair?).

Give the wrong employer the wrong type of scheme with the wrong type of method for claiming tax relief and tax relief will be denied.This won't be a problem today and will not be a problem tomorrow but when the phones stop ringing with PPI callers there will be a new subject for your claim...lawyers are already at work designing the infrastructure to do this, I know they have told me.

Did your accountant recommend a pension scheme to your employer that denied you tax relief?...if so call 0845 etc and we will claim this back for you at no cost etc etc

so, there seem to be four choices:

Get involved and offer choice yourselfOutsource the risk to a third partyWait for the claimsStop providing payroll




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Stephen Quay
By squay
01st Oct 2015 14:33

Or just go with NEST.

#[email protected]

Or just go with NEST. That's the government backed scheme that accepts everyone. Surely we can't get into trouble if we suggest NEST to clients. Can we?

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By [email protected]
02nd Oct 2015 09:29

NEST is the same....

NEST is a privately run Master Trust funded by subsidised government loans. Recommending NEST is the same as recommending Scottish Widows or any other pension provider.

In fact you could suggest  that in some respects NEST is worse as where it will accept all comers it restricts contribution level below government maximums and will not allow transfers in and out for members. It is a little different in terms of death benefits for members and can lead to additional tax on death etc etc ...

A recommendation is a recommendation no matter how soft you think the message.

This is not illegal you are perfectly within the TPR guidance to recommend anyone to your Corp clients as long as you can demonstrate a requisite level of Knowledge Skill and Understanding of the pension market. But this also means you can recommend Aviva or L&G or TPP or NOW:Pensions....the list would go on

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