The insurer estimates the external accountancy cost of complying with the framework at around £60,000. With internal costs factored in this will push up the cost of complying to over £100,000 it says.
On the basis of a 0.5 per cent charge this would require a further £25m of assets to recoup the revenue lost, but given the costs of running the extra pensions needed to pay the costs, it estimates at least £70m extra pension assets will be required to generate sufficient profit to pay this extra compliance cost.
The provider is also concerned that there will not be a competitive market amongst accountants for offering compliance services if there are only 10 or so master trusts actually seeking compliance.
L&G says it will comply with the voluntary assurance framework but will monitor whether employers are engaging with it, and may drop the scheme if there is no appetite for the validation it offers.
The framework is expected to raise the barriers to entry into the master trust market, which could lead to those master trust advisers that do adopt the framework gaining more business than they would had it not existed.
L&G Trustees director Paul McBride says: “It is too late for the NAPF to try to influence this as this consultation has been in progress for a year now.
“TPR and ICAEW have been collaborative in the process, and we support the concept, which is to help those on the buy side know they are with a quality operation and to raise the barriers to entry into the market.”
