The move follows an announcement by the Department for Work and Pensions that from April 2016 workplace pension schemes will be banned from charging members who have left the scheme higher fees than members who are still actively contributing.
Friends Life confirmed it would give its active member discount schemes the chance to move to a single charge at the current active member rate with immediate effect.
Colin Williams, managing director of corporate benefits at Friends Life, said: “The introduction of auto-enrolment means that under current AMD scheme structures, large numbers of employees pay higher deferred member charges on each pension they accumulate as they move between employers. We are taking action now to remove deferred member charges.”
According to the 2013 Office of Fair Trading report into workplace savings, there are approximately 10,000 schemes in the UK that use an active member discount.
Adviser view
Tom McPhail, head of pensions research at Bristol-based Hargreaves Lansdown, said the move marked “the beginning a huge shake-up of workplace pensions” as providers and advisers adjust to a world where there are no AMDs, no default fund charges above 0.75 per cent and no commission. He said: “Workplace pensions are getting cheaper and more transparent for those paying into them today, but older pots are in danger of getting left behind the times. Those who have older pension pots should dust them off and see if they still stand up to today’s standards. In many cases it may be possible to reduce charges, or get a better fund, or to consolidate them to make them easier to manage.”
