Scottish Equitable has unveiled a new processing idea which is one step closer to compulsory pension...
Scottish Equitable has unveiled a new processing idea which is one step closer to compulsory pensions, because it allows employers to sign employees up to their group personal pension and group stakeholder schemes on their behalf.
New administration and application features do not mean the employer can sign its employees to the pension scheme without their permission, however, changes to its processing are part of Scottish Equitable's drive to encourage compulsory pensions take-up.
Under the new system, an employer can sign members up to the company group pension plan providing they have given permission for him to do so.
Once permission is received, he need only sign one document, rather than requiring employees to fill out individual application forms, and premiums can then be taken to match his own.
Jonathan Black, head of sales, group pensions at Scottish Equitable, says once an employee has given permission, they are still given the statutory right to cancel their membership if they choose to do so, but the idea is to free up an IFA's time from administration so they can concentrate on the need for advice and reduce their workload.
"IFAs have to spend a lot of time getting people to sign up, when they could be giving them advice," says Black.
"We have had IFAs who wanted to go down a more direct offer route, so that is what we have tried to produce. Through this system, the employer proposes on behalf of the member, in bulk, providing they have given permission to do so."
These changes have also been made, adds Black, because the company wants a simple administration system once compulsion is introduced.
However, employers will only be allowed to adopt the simpler administration system if both employers and employees agree to pay at least 3% each in premiums.
Once an employer has signed up, each joining member will receive a letter explaining the scheme with the option to cancel membership if they wish.
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