Standard Life 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.
In Standard Life’s price commitment documentation on its advised Good to Go workplace proposition, Barry O’Dwyer, managing director for advisers and workplace, said: “If the terms of your scheme are currently higher than 0.75 per cent, Standard Life will reduce the member charge to be no more than 0.75 per cent in time for April 2015.
“For larger schemes, meaning schemes with 50 or more employees and at least £150pm average contributions (after allowing for minimum step ups in 2018) Standard Life will bear the cost of the reduction in charge.
“For smaller schemes, meaning all other schemes that meet our standard criteria, a scheme management fee will be introduced at the same time as the reduction in member charge.
“If a scheme management fee applies, it will be £100 per month. We will notify you at least three months in advance of its commencement and we won’t require any further action from you.”
Standard Life played down the impact of the charge by saying it is “tax deductible as a valid business expense” and emphasising that “it will not be subject to VAT”.
The fee will be reviewed annually and the firm expects it will rise each year in line with inflation.
At the end of last month, the department for work and pensions revealed that workplace pensions will be subject to a management charging cap of 0.75 per cent from April 2015.
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.
Earlier this month, Standard Life rolled out an ‘express’ version of its Good to Go scheme. The maximum member charge will be 0.75 per cent a year and an employer scheme management fee of £100 a month will also apply.
Jamie Jenkins, Standard Life Head of Workplace Strategy:“We want to ensure we can continue to offer high quality schemes to even the smallest employers. So, while there is continuing pressure to reduce charges for pension scheme members, we want to ensure this does not result in a dilution of our proposition that could adversely impact member outcomes.
“We have been considering ways of sharing the cost of providing the pension scheme between the employee and employer, while mitigating any cross-subsidy between schemes. This will result in us asking some employers to pay separately for employer administration services.”
