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Who will pick up the pieces....

4th Nov 2014
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I have been prompted to post this thought by a couple of conversations I have had recently with pension providers. There are a number of providers that both Master Trust and Contract based arrangements (Aviva might offer a Group Personal Pension Plan which is contract based scheme where The Peoples Pension will offer a Master Trust).

So what I hear you say.....

Well with the new pension freedoms announced in the budget members/employees will be asking many questions in relation to these new freedoms. They will be asking these questions of employers/advisers of such schemes after April of 2015. 

So what I hear you say again....

Well, one of the many differences between the two arrangements is that a Master Trust is an arrangement between the employer and the provider and members are predominantly serviced/looked after through the employers/adviser attached to the Master Trust. A Contract based scheme is set up through the employer but each member has a contract with the provider and can go direct to that provider to ask questions around their contract and its functionality.

It therefore strikes me that there may be a case for caution when an unregulated adviser recommends a Master Trust to their clients. This is because if a Master Trust is set up then potentially the employer concerned will carry more responsibility for answering employee questions than if a contract based scheme is chosen. In turn this may lead to more employers asking the non regulated adviser to provide support in answering these questions, after all they recommended the scheme. 

I am sure that the providers will help in some respects (lets see where we are in Jan 2016 when 137,000 businesses stage in one month!) but wondered what others thoughts were in this area bearing in mind many accountants are talking about recommending schemes or forming alliances with the Master Trust providers for all of their clients.

How will a non regulated adviser answer an employee's questions if they have recommended a Master Trust over a Contract Based scheme for their clients? 

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By Simon Leyland
08th Nov 2014 12:28

In agreement with that........
Good post Steve and you're correct this is a common theme when in discussion with accountants/bookkeepers/payroll. There is a very thin line (and confusion) when it comes to 'who gave the advice' and I come across a lot of professionals who believe they will be fine if they just 'point the client in the right direction'.
The problem, as we both know, is that there simply aren't enough authorised advisers to go round. So, 'commoditised' processes will be the norm as we approach 2016-18, any employer who wishes to obtain a bespoke solution will possibly have to pay handsomely for it.
I hear there are law firms queuing up to enter (or is that create) the 'AE misselling market', so anyone who thinks they can slip under the radar best think again! With TPR imposing the first fines recently, I think the next few months will be very interesting.

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By [email protected]
14th Nov 2014 09:36

Audit trail....

I have also heard that where there is no intention to police an employers pension decision (providing the scheme is a QWPS) there may be a question about how the scheme was chosen.

"Please Mr Corporate Client show me the REASON you chose Happy Shopper Master Trust Pension and the process you followed to get to that decision....my mate Don who's an Accountant said that he uses them and plays golf with rep so I decided that was good enough for me!!"

I have a funny feeling that may not pass muster!

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