Zurich is set to cap pension charges following its inaugural Independent Governance Committee (IGC) report.
Over the course of 2016, a cap will be applied to charges over 3 per cent. However, this is a holding position, according to Laurie Edmans, chair of Zurich’s IGC.
The final position will be decided following research by the IGC, based on consumers views on value for money.
Speaking to Financial Adviser, Mr Edmans said: “We’re going to base our final view on value for money from results of consumer research that we complete over the course of 2016.
“We took the view that anyone paying charges above 3 per cent could see the value of their pot go down in real terms [as a result of inflation].”
He added that with this holding measure in place, Zurich’s clients would not suffer in real terms, so they will be inflation protected, unless the market performs unexpectedly.
Mr Edmans said Zurich’s IGC was unusual in that it was getting member research from consumers. “Nobody has done it like this before in our world, and whether we can pull it off will be interesting to find out.”
The methodology mirrors that used by the Department for Work and Pensions when it was canvassing public opinion on auto-enrolment.
The IGCs are able to report failure to follow their recommendations directly to the regulator.
David Trenner, technical director at Glasgow-based Intelligent Pensions, said: “Three per cent on the total fund as opposed to a higher per cent on part of the fund might not necessarily be hugely different. For many clients this will not make a difference because, although there is a heavy penalty on part of the fund, part of the fund was unpenalised. For some clients this would be very attractive.”