Question: If a client already has a personal pension, independent of any employer scheme, and pays 5% of income into it. Will they, possibly on affordability grounds, have to redirect some of that premium into the new personal account at the expense of their current pension plan?
Edmund Downes, Norwich Union: Yes, unless their employer makes the necessary 3% of banded earnings into their existing personal pension the employee will need to be auto-enrolled into a Qualifying scheme. They don't have to pay into this Qualifying scheme as well, as they can opt out, but then they would lose the right to an employer's contribution. They should not be encouraged to opt out - even if, paradoxically, they might be better off under their existing plan. If they don't opt out then they will end up paying two sets of contributions, so unless they reduce their payments it may well...
To continue reading this article...
Join Professional Adviser for free
Signup and gain exclusive members-only insights
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes
