Aegon is set to carry out a “comprehensive review” of its existing pension schemes while it ascertains how the transition to the 0.75 per cent charge cap will work for those schemes that are already auto-enrolled.
At the end of March, 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.
Aegon said today (24 April) that it will apply the auto-enrolment cap for all new business written from 31 August 2014. Aegon said it will not be retrospectively applied, despite having a “significant number” of employers who are in their final stages of auto-enrolment, as it “does not want to unsettle these at this late stage”.
For this reason, only schemes going through their initial assessment of the auto-enrolment population after 31 August 2014 will receive these new terms, Aegon said.
Angela Seymour-Jackson, Aegon’s managing director for workplace solutions said: “Now we have clarity on the level of the price cap and other charge restrictions, we want to work with employers and their advisers to plan ahead, drive value for customers and continue to make a success of auto-enrolment.
“We’ll be carrying out a comprehensive review of our existing pension schemes in the coming weeks, and can reassure employers and advisers, that we’ll work with them to transition to DWP compliant terms.”
Standard Life recently announced 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.
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.
Previously, Standard Life also 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.
The 0.75 per cent cap means that the government-backed default provider National Employment Savings Trust will not be left out in the cold.
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.
