Personal Pension  

Market View: Providers defend charging structures

An Aegon spokesperson said that the report sets out a detailed ‘worst case’ analysis of where scheme members could potentially not receive value for money. The firm stated that it is well advanced in implementing the 0.75 per cent threshold.

“The data within the audit is from April 2014 and does not reflect widespread charge reductions and simplifications now underway.”

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An Aviva spokesperson also confirmed that from 2001 it capped all existing individual and group personal core pension charges at 1 per cent, and from the start of this month implemented early the 0.75 per cent charge cap on the “vast majority” of qualifying business.

“Our focus is now to review the recommendations of the IPB, take action where required and work with our independent governance committee to ensure the interests of our workplace pension customers continue to be best served.”

Legal and General, which left the ABI earlier this year, stated that it was the first insurer to cap charges at 0.5 per cent on default auto-enrolment schemes and urged the government to reduce its 0.75 per cent charge cap to this level.

“We have rejected unfair charging practices such as poorly named active member discounts and already have independent governance committee in place to oversee value for money. “Our pensions account for only 0.7 per cent of the £25.8bn assets under management potentially exposed to charges of above 1 per cent quoted by the IPB today.”

Jamie Jenkins, head of pensions strategy at Standard Life explained that the firm re-priced its pension plans in 2001/2002, reducing charges to a single annual percentage of funds of less than 1 per cent and then removing most upfront commission payments in 2006.

A spokesman for Scottish Widows did not go into any detail on their charging structures, but said the review had given a clear path for the industry to make sure retirement saving is a transparent and trustworthy process.

Zurich said that its older pension schemes make up only a small proportion of the schemes covered by the audit.

“We agree with the conclusion of the report that no single charging structure can provide value for money for all customers all of the time.

“We are in the process of appointing an independent governance committee which will review the IPB’s findings in 2015 and we will be working closely with them to ensure the right outcomes.”