Review finds GPP sales must be brought in line to protect employers

A Retail Distribution Review report into group personal pensions (GPP) has concluded, following consultation, that consultants and advisers should be prevented from taking commission for recommending the schemes to employers.

And FSA market policy chief Peter Smith warned consultants would look to sell GPPs to individuals instead of private pensions if the rules were not pushed through.

He told PW: “Our evidence, anecdotally, is that certain groups in the market, who more broadly do not like the move away from commission, would do that.

“We want these changes to lead to better conversations between employers and the people advising them on their schemes, and trustee boards as well.”

Smith added commission drives the bulk of GPP sales by financial advisers, more offer corporate services, rather than the specialist employee benefits consultancies.

The City regulator also argued high charges associated with commission-based workplace pension scheme sales are also hitting the smallest employers hardest.

The document states: “Our view is that there is anecdotal evidence to show that employers, especially the smaller ones, do not necessarily engage with the cost of the services they are receiving and they may not recognise the charges that their employees’ pension contracts will bear.”