Royal London is to pay trail commission to new and existing advisers on workplace pensions until at least April 2016, the group has announced today (14 March), one year after the DWP’s changes take effect.
Royal London announced in a statement that existing ‘retirement solutions’ workplace pension schemes, which are currently branded Scottish Life, will be re-priced to a market competitive level within the cap, and consultancy charges removed.
In a statement, Royal London said advisers will also continue receiving initial and trail commission if the employer’s staging date is post April 2016.
Royal London also said it will re-price schemes individually so the annual management charge will be at a market-competitive price. It also said it may charge some employers a fee “so that we can continue to provide the same high quality of service”.
In April, Standard Life said it is set to introduce a ‘scheme management fee’ of £100 per month for smaller employers with modest contributions who have previously agreed terms with the provider that are above the 0.75 per cent scheme charge cap.
Royal London will also add adviser charges to its group personal pensions once commission is removed.
This follows the announcement by the Department of Work and Pensions in March that a default fund charge cap of 0.75 per cent is to be enforced on workplace pensions from 1 April 2015, as well as financial adviser commission and consultancy charging banned.
In a statement, Royal London said: “Our workplace pension charges will be changing to comply with the new legislation capping default fund charges and banning commission and consultancy charging on qualifying and auto enrolment schemes.”
Isobel Langton, chief executive of Royal London Intermediary said: “These changes are driven by new legislation, which we need to make for our proposition to remain compliant.
“We looked closely at whether or not we should remove commission from April 2015, but have decided that the best way forward is to continue to pay commission until April 2016. This allows advisers more time to integrate these changes into their business models and highlights our support of the intermediary market.”
The government had initially proposed capping charges at either 0.75 per cent or 1 per cent - or applying a comply or explain middle ground between the two - to be introduced from April of this year.
In January the move was delayed for “at least a year” to April 2015 while it reviewed what would be included in the cap amid fierce lobbying across the industry.
