The issue of auto enrolment has once again been raised in Parliament. This time it has been by the Conservative MP Craig MacKinlay who represents the South Thanet constituency in Kent. Mr McKinley raised several points at the meeting of Parliament's Pension Select Committee.
Nannies and carers
Something that many people don't realise about auto enrolment is that anyone who employs a nanny or carer is technically classed as a business and therefore if their employee fits the criteria for auto enrolment, then they have to auto enrol them into an occupational pension scheme.
Availability of advice
Leading on from this, Mr McKinlay said that quite rightly, families that employ nannies and carers will want to seek advice on auto enrolment but IFAs will not be interested in offering advice because it won’t be profitable for them. He stated:
"An IFA, if you said I've got a nanny employed, would you like to have an interview with them and suggest a great market that is out there - they would laugh at you."
This potential outcome was confirmed by Aileen Broomfield, who employs a carer for a member of her family who looked at one IFA and said,
"You can look at their frequently asked questions and it said that if you need some advice it is £325 plus VAT. That is three times the annual contributions in one go."
It's clear that some families may be put off by the cost of such advice from IFAs and may therefore not have access to independent advice when considering their auto enrolment options.
As 1.8 million micro employers and small employers set to auto enrol before 2018, it is surprising that more IFAs are not engaging with auto enrolment. In a recent survey, those not offering auto enrolment advice gave their reasons for not doing so, with 45% saying it was not part of their core business, nearly 20% saying there was no profit in it and nearly 15% admitting they did not have the knowledge or expertise to deal with it.