Insurance and pensions provider Friends Life will put an end to its active member discounts, offering all AMD scheme members the option to switch to a single charge with immediate effect.
Active or deferred members within these schemes will pay the company’s current active member charge of a minimum of 0.35 per cent, or 0.3 per cent if customers agree to a five-year commitment.
The change means all future deferred members will not have their charges increased if they move employers or cease contributions.
Active member discounts will be banned from April 2016.
Colin Williams, managing director for 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’re taking action now to remove deferred charges.
“We have already started working with a number of our clients who proactively wished to move to a flat charge structure, at the active member rate, and we are now extending this offer to all of our clients with an AMD scheme.
“Due to the quality of our AMD portfolio and our relatively limited exposure we can make these changes for the benefit of our customers without a material financial impact on our business. We are aware that many AMD schemes in the market are on higher AMC terms and we are happy to consider offering a single AMC solution to schemes that wish to future proof ahead of the ban.”
“According to the 2013 Office of Fair Trading report into workplace savings there are approximately 10,000 schemes in the UK that currently use an active member discount. If all pension providers take the same stance as Friends Life, there will be a large number of members that stand to benefit.”
