The Trades Union Congress is calling on the government to ban employers from passing on consultant fees to staff pension pots ahead of the auto-enrolment pension scheme.

The Trades Union Congress (TUC) is calling on the government to ban employers from passing on consultant fees to staff pension pots ahead of the auto-enrolment pension scheme.

The trade body fears that the cost of taking advice from consultants on the implementation of automatically enrolling staff in a pension will be recouped from pension contributions.

The largest employers need to start enrolling staff from this autumn, with other employers following in a phased programme finishing with the smallest employers in 2016.

Many employers are seeking help from outside consultants to ensure that they are meeting their new pension duties. Large employers appear to be absorbing the costs of outside help, but some medium and small employers are planning to recoup the costs of outside consultancy from pension contributions – an additional charge on top of those already levied by pension providers.

This practice, known as consultancy charging in the pensions world, is legal but in a letter to pensions minister Steve Webb the TUC is calling on him to use his powers to cap charges in pension schemes to outlaw consultancy charging.

TUC General Secretary Brendan Barber says, 'It is completely wrong that staff who pay in auto-enrolment pensions should have to meet the employer's costs of making sure that they obey the law. This is a cost that should fall on the business as a whole.

'Particularly in low-paid sectors where staff change job frequently, those unlucky enough to work for employers using consultancy charging could find a big chunk of their pension going to consultants, rather than to provide retirement income.

'Auto-enrolment is a huge advance and the TUC is a strong supporter, but we worry that consultancy charging will sour its introduction. We applaud pension schemes such as NEST who have said that they will not implement consultancy charging.'

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