Ban looms on pension ‘consultancy fees’

July 2, 2013 Leave a comment

July 1, 2013 4:33 pm

Ban looms on pension ‘consultancy fees’

By Josephine Cumbo

A ban on deducting charges from members’ pension pots with their consent, known as “consultancy charging”, is set to come in by November under government plans outlined on Monday. Draft regulations before parliament would stop employers from consultancy charging in schemes used for automatic enrolment. Consultancy charging allows employers to pay a professional adviser for pensions management work out of employee pension contributions. Research by Which?, the consumer group, found that the charges could reduce a member’s first year savings by up to 50 per cent and said the impact of charges was particularly damaging for low earners and those who change jobs frequently. In May, Steve Webb, the pensions minister, announced plans to ban the practice for automatic enrolment schemes, saying, “it is vital that the pension savings of individuals who are automatically enrolled are protected”. Under the draft regulations, a scheme that allows the deduction of charges from contributions will no longer be allowed to remain as an automatic enrolment scheme if those charges are made to a third party. The definition of a third party excludes trustees and providers. The draft regulations will not cover “legally enforceable” consultancy charging agreements in place before May 10 when the minister announced his plans for a ban. The government expects the ban could come into force by November at the latest. It added that it intends to extend the prohibition on consultancy charges to all qualifying schemes.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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