Fears over high auto-enrolment member charges in company schemes ‘exaggerated’

Fears compulsory workplace schemes might burden members with charges that are too high are “exaggerated”, a senior actuary says.

Barnett Waddingham senior partner - and former chairman of the Association of Consulting Actuaries - Adrian Waddingham (pictured) said comments by Hermes Focus Asset Management chairman David Pitt-Watson at a work and pensions select committee yesterday that compulsory workplace schemes could burden members were overblown.

Waddingham said many pensioners now enjoying good company pensions might not have be doing so had their employers not made pension plan membership a condition of employment.

He said: "Sadly this right was taken away by misguided legislation in 1988. Human nature being what it is, younger employees have seen little merit in joining voluntary schemes - even those which do not require member contributions."

Waddingham also said pensions mis-selling scandal was involved personal pension arrangements rather than workplace schemes -

He said: "Employers take care in choosing their arrangements, and as Lord Turner commented in the Pensions Commission report in 2005, low expenses are a hallmark of good workplace schemes."

Waddingham also said the coming Financial Services Authority reforms of the commission arrangements on financial products would rein back the "higher and inappropriate commission arrangements that lay behind the mis-selling scandal".

He concluded: "Even at their best, workplace pension schemes only reached half the employed workforce and bringing more employees into pensions has to be good."