From March 2022, a number of its pension products will have an annual charge cap of £235 or no more than 0.5 per cent of the policy value, whichever is lower.
The monetary cap will increase each year in line with the average weekly earnings index but the 0.5 per cent cap will remain the same.
The charge cap will apply to Phoenix’s personal pension, the executive pension, the section 32 and the retirement wealth account.
The new cap does not apply to investment related charges; the annual fund management charge and annual fund expenses are separate charges that apply to customers’ chosen investments. These charges vary depending on the fund chosen, and are deducted from the underlying fund on a daily basis and reflected in the unit price.
Phoenix stated: “Following a recent review, we've decided to introduce caps and limits on charges on some of our pension products, which means the amount most customers pay for their policy will be less, especially for the lowest valued policies.”
For example, clients in drawdown in the retirement wealth account pre-April 2015 currently pay an annual charge of £135 and a drawdown charge of £125-£175 a year.
But from March the total of these charges added together will be capped at a maximum of £235 a year and the amount taken will never be more than 0.5 per cent of the policy value.
And clients in the same account post-April 2015 currently only pay a drawdown charge of £175. This will be capped at 0.5 per cent of the policy.
Phoenix is writing to clients from this month to make them aware of the changes.
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