Aegon vows to work with OFT over pension ‘discounts’

Adrian Grace, chief executive of Aegon UK, said the company was in the process of coming up with “the right solution” over the controversial AMDs.

Last month, the OFT produced a report into occupational pension schemes, in which it said that AMDs, whereby former employees who remain in the pension scheme as deferred members are charged at a marginally higher rate than current, active members, were unfair.

It claimed that as deferred pension investors needed less administration, they should not be subsidising the costs of active members.

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Mr Grace said: “We have to see how this plays out. We have offered AMDs and we want to make sure that we treat customers fairly.

“I could lay out many advantages for AMDs for workplace schemes, but is it really of value to do this at this moment in time? We need to work together with the ABI and OFT to see what the right solution is and to implement this appropriately.”

He added that Aegon UK would work together with the OFT and is in the process of setting up an independent body for its workplace schemes, which will look into such issues.

Tobin Murphy-Coles, commercial director for national advisory firm Lorica Employee Benefits, said: “We place £500m of employee pension savings with companies such as Aegon UK each year. We like Arc because it allows us to place a series of savings vehicles into both the work and home environment that are controlled within ‘gates’.

“This means that an individual can only access a later ‘gate’ once they have acquired the knowledge to access that particular product. For example, an Isa may be in gate one and accessible by all, while share trading would be in a later gate and requires an adviser to ratify the transaction.”