- You can provide investment advice to employers choosing a pension scheme, but you need to be authorised to provide advice to individuals.
- You could support an employer by providing factual information, helping them to compare schemes, making a recommendation or referring them to another adviser.
- Ultimately, it’s the employer’s legal responsibility to choose a pension scheme.
Authorisation to provide advice
You can provide investment advice to an employer choosing a pension scheme for automatic enrolment. However, you should only provide investment advice to an individual if you have the appropriate authorisation from the Financial Conduct Authority.
It may not always be clear whether an employer is seeking advice as an employer or an individual, eg if your client is thinking about joining the scheme themselves. You may want to specify in your letter of engagement that any advice you provide to a client is provided in their capacity as an employer – and not as an individual.
If you belong to a professional body they will have a set of ethical standards that you should refer to, which may include that you have sufficient knowledge and experience to offer automatic enrolment services. You should also check to make sure that any automatic enrolment work that you carry out is covered by your professional indemnity insurance.
Ways to support clients
The ultimate responsibility for choosing a scheme lies with the employer. However, you can support a client with this task in a number of ways:
- provide factual information, eg you could identify the pension schemes available and provide a comparison of the schemes’ investment funds, charges and services
- recommend a specific pension scheme for automatic enrolment – for more information, go to find a new pension scheme for clients
- refer your client to another adviser – you can use websites such as the Money Advice Service retirement adviser directory, which contains advisers who can help employers choose a pension scheme for automatic enrolment
If you recommend a specific pension scheme, there are a number of issues that you may wish to consider with your client. Go to what to consider when choosing a scheme.
A business adviser's role in helping clients to choose a pension scheme
Your role in helping your clients to choose a pension scheme for automatic enrolment.
Automatic enrolment solutions
If you offer a solution that links to one or more specific pension schemes (eg the payroll software is set up to link best with a specific scheme), you should make your client aware that there may be other pension schemes available that could be more appropriate for their staff. If you don’t do this, there’s a risk that you could be seen to be restricting an employer’s ability to actively choose their own pension scheme.
Write to your client’s staff
If you have agreed as part of your services to write to your client’s staff about automatic enrolment and their rights, you need to make sure you don’t inadvertently provide investment advice. We’ve developed letter templates to help you with this task.
Help a client with tax relief
You may need to help an employer with how tax relief is applied to staff pension contributions.
Many pension schemes only support one tax relief method, so you should understand which system they use.