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1% cap forces Widows to scrap commission on low premiums

Scottish Widows says the stakeholder charge cap has forced it to axe commission for some group pension business.

It will no longer pay commission on new group personal pensions, occupational money-purchase and stakeholder schemes where there is no employer contribution or where the average premium per member is £100 or less a month.

It will closely assess all new schemes with annual premium income of more than £250,000 before offering terms, to avoid businesses where staff turnover is high.

Widows says the change, which takes effect for all new schemes quoted from January 26 and business transacted by March 22, will affect around 10 per cent of its corporate pension business.

Scottish Widows corporate pension sales director Iain McGowan says: “We have reviewed what is profitable and what is not and found that group personal pensions, occupational money purchase and stakeholder do not work for us within the 1 per cent charge cap for lower-premium business.”

Syndaxi Financial Planning partner Robert Reid says: “Widows is trying to protect itself financially. This shows it is all very well having a catchy price cap but if it does not allow enough cost to make it work you simply cannot do it.”

Beric Webb Associates principal Beric Webb says: “Widows&#39 decision that it is not economic to trade below this level will have the effect of discouraging business from advisers living off commission only.”

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