Mutual life company Royal London will share a portion of its profits from last year with more than a million of its members.
The company’s ProfitShare scheme will see £114m of its 2016 profits distributed among more than one million members, bringing the total amount distributed to Royal London customers since 2007 to £650m.
Around one third of the money distributed will go to customers who saved into or took some retirement income from a pension with Royal London last year, with the amount paid dependent on the size of the client’s pension pot.
Royal London stated that these payments will effectively wipe more than a third off the charges for a quarter of a million pension savers.
Last year the company increased the pool of customers who are eligible to share in its profits to include all unit-linked pension and drawdown members, meaning that anyone automatically enrolled into a Royal London workplace pension scheme or taking an income from an eligible Royal London pension will receive a portion of the profits.
The ProfitShare scheme aims to pay between 0.15 and 0.25 per cent of the unit-linked value of the qualifying customer’s plan, with the extra money invested to help retirement savings grow further.
Royal London chief executive Phil Loney called the ProfitShare programme a “powerful demonstration of the extra value” the firms provides to its customers.
“It offers a tangible benefit and is real proof that we have their interests at the heart of our business,” Mr Loney said.
“In simple terms, when Royal London does well so do its customers.”
Dennis Hall, chief executive and chartered financial planner at Yellowtail Financial Planning, said that Royal London’s plan to share profits with customers was a “good move” as it allows the company to give clients a short term fee cut.
“It gives Royal London the opportunity to not commit itself to something long term in case it has to increase fees later on.
“Slashing fees is difficult if you have to put them back up later on.”
julia.faurschou@ft.com
