20th May 2014
Pension firm Aviva is introducing a pension charge cap for workplace pensions by the end of the year three months earlier than the deadline set by the Government.
The move means that some investors whose company pensions are managed by Aviva could see their charges fall though as the firm points out many new schemes already come under the cap while some smaller employers could face an additional charge.
The firm will also stop paying any initial commission to advisers to the schemes though it will continue to pay some types of ongoing commission until another Government cut off point in 2016.
Aviva will also remove most active member discounts, a system where those who are active members of a pension scheme are charged less than those who have left their money invested, but are no longer employed. With a few exceptions, non active members should move on to the same lower charging regime though there may be a few exceptions where the active charges are very low at around 0.35% annual management charge.
Aviva says its average annual management charge for new schemes in the last two years has been 0.5%, well within the price cap.
Discussing the changes, Hargreaves Lansdown says the changes are going to put the squeeze on advisers to pension schemes who will now have to charge fees to their employer clients sooner rather than later. “This probably wasn’t in the plan for many of them- a recent survey conducted by Hargreaves Lansdown found that half of employers have not yet been told by their adviser about the forthcoming commission ban,” the firm said in a note today.