Royal London comments on potential pension decumulation charge cap
12 June 2015
Following comments on the level of charges that are being applied to customers trying to access their pension funds or take advantage of the pension freedoms and the potential introduction of a charge cap:
Fiona Tait, Pension Policy Specialist at Royal London commented:
“Royal London would support Lord Flight’s comment in that it would be better to put pressure on providers to offer reasonable charges than to use legislation.
Royal London does not support artificial controls, such as charge caps. We believe that a competitive market is the most effective way to drive a good deal for customers. However for the market to work efficiently it will need pressure from those that really understand customers’ needs, like impartial advisers, to work on their behalf.
If charge caps are to be put in place for drawdown then we believe our charging structure would most likely comply. We already operate within a charge cap for our group pensions contracts, which also include an independent governance structure and agree these concepts could equally apply to decumulation products.
However, Royal London does not agree that people have to pay a fortune to access their pensions as Lord Hughes and Baroness Drake have suggested. For example, we make a simple one-off charge to customers for setting up flexible access to their pension - a single charge of £184 with all subsequent withdrawals free.”
Fiona continued; “We also believe that it must be very clear what is and what isn't included in any charge cap. Plus consumers should be allowed to buy additional features, on top of what is covered in the basic charge, if they wish or are advised to do so - particularly, if the additional facilities would be beneficial to their particular circumstances.
Any charge cap on pension drawdown products should also take into consideration the extra support and the greater requirements, compared for example, with the requirements involved with auto-enrolment arrangements. So any potential decumulation charge cap should reflect this.”
For further information please contact:
Berni Ryan 0207 506 6740/ 07919 170127 Berni.firstname.lastname@example.org
About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with Group funds under management of £86.3 billion. Group businesses serve around 5.3 million policy holders and employ 2,859 people. (Figures quoted are as at 31 March 2015).
The Group is currently moving all of its UK businesses under a new version of the Royal London brand. The Group's independent wrap platform will remain branded Ascentric.