For a while now many of the larger product providers have been providing auto-enrolment middleware with their schemes as a ‘free’ add-on for employers. This has been a feature of the AE market in its early years, but it is something that government is looking to regulate*. The view now is that the cost of compliance middleware provided to an employer to help run their business should not be charged to their employees through their pension product. The argument is the same, of course, as far as commission is concerned. The cost of complying with automatic enrolment requirements should be met by the employer, not the Staff.
While some of the large pension providers do not seem to want to distribute workplace pension schemes to ever smaller firms as they reach their staging dates, there are some that do and some of those still claim to be providing AE middleware as a ‘free’ add-on to their offerings. However, in the long run there are only two ways that such a ‘free offer’ can work; it is either genuinely free, or it is paid for in some way either by the employer or the employees.
It will not be possible to charge this to employees, so if there is a cost to the middleware employers will need to be billed directly for it. Some GPP providers do this already.