Scottish Life supports advisers' transition to fee-based model

This will apply for existing ‘pipeline' schemes and for new arrangements.

Ewan Smith, Managing Director of Scottish Life, said:

"Advisers have a vitally important role in making AE a success, especially in the SME market.  Most SME firms will need professional support in meeting the challenges of AE, including complying with the ‘employer duties' regulations; designing the AE solution that best meets their requirements and circumstances; and identifying the pension solution that best meets the needs of employees.

"Employers, advisers and providers all need to plan well ahead of the staging date.  This is of particular importance given the widely recognised ‘capacity crunch', as the volume of companies reaching their AE staging dates increases sharply through 2014 and beyond.

"It's clear that some employers have understood the benefit of being ahead of the game.  Scottish Life has already set up a number of new schemes - with many more in the pipeline -- on a CC basis.  With many of these, the employer's staging date is more than a year or two in the future.  This approach benefits both the employer and the scheme members.  The scheme members are starting to build up their pension savings, with the help of employer contributions, earlier than the AE legislation requires.  And the employer also benefits by having a qualifying scheme in place well ahead of any ‘capacity crunch' issues."     

Having carefully considered the recent DWP announcement, Scottish Life has decided:

- to continue to offer CC for schemes which are in the pre-AE phase. This will apply both for ‘pipeline' schemes and for new arrangements

- to monitor the use of CC to help ensure that good member outcomes can be delivered

- to keep in contact with DWP, and any other relevant bodies, to help ensure that the approach taken is fully compliant with the planned legislation

Ewan Smith added:

"We've always seen Consultancy Charging as being an important part of building the transitional ‘stepping stones' to a fee-based business model, where employers pay the adviser directly.  Obviously the CC payments will need to be stopped no later than the employer's AE staging date.  Alternative remuneration arrangements (for example, fee payments) would then need to be put in place.

"Scottish Life's promise is to continue to support advisers, in a variety of different ways, to help ensure good outcomes for employers and for scheme members."