Webb vague on RDR to avoid ‘confusion’

Last week when asked how the government plans to monitor the impending retail distribution review’s (RDR’s) impact on auto-enrolled staff – an issue recently raised by the Trades Union Congress – his answer indicated there was still work to be done in this area.

“It has been suggested that different bits of government have said slightly different things so I’m going to avoid saying a further different thing at this point,” said Webb.

Outlining a general approach, he explained that the government’s key test should be whether an individual benefits from advice given to an employer.

“For example, if money is spent ensuring that the individual gets an appropriate pension then it is legitimate that they might pay part of it, but you can’t just take the money out of their pension,” said Webb.

But he did not elaborate on how this would be implemented in practice and what would happen if an employer went against this “key test”.

He added: “It has to be looked at in the benefit of what the individual gets but I’m not going to say too much more at the risk of creating further confusion.”

The TUC has expressed concern that when RDR comes in and employers are required to pay upfront for financial advice rather than commission based fees, employers will opt to pass on the costs of advice to auto-enrolled staff.

The TUC said it was in ongoing discussions with the Department for Work and Pensions about the “niggling issue” and stressed it was vital for the government to closely monitor how consultancy charging was being used so employees aren’t unfairly hit with additional costs.