In its response to the FSA’s corporate pensions questions in June’s RDR consultation paper, Aegon says RDR-style changes could benefit the GPP market but the proposals need to be specially tailored.
It warns that a ban on factoring and a “straight copy over of solutions designed for the individual investment market” could have unintended consequences.
Aegon is proposing the introduction of arranger charging agreed at employer level for employer advisory services and a standardised form of adviser charging, agreed with the employer, for members.
It is also calling for existing schemes to be allowed to continue to remunerate advisers under their current methods, including for new entrants and increments.
Aegon is pushing for the FSA to allow providers to continue to offer factoring, so that charges to pay for advisory services can be spread over the first few years of membership. It says this is vital in avoiding nil or heavily reduced allocation periods which would “significantly reduce member take-up”.
Head of business regulation Steven Cameron says: “GPPs are arguably the most important regular premium savings products in the UK providing an ideal savings route and a valuable employer contribution for millions of employees. As with the individual market the RDR gives us an opportunity for improvement but we need to recognise the unique features that make it different from the individual market.
“The employer is the primary customer and full advice at member level is rare. Employers come in all shapes and sizes with different advice needs so a one size solution does not, and never will, fit all. We’re urging the FSA to apply RDR measures flexibly and pragmatically.
“Aegon is particularly concerned that the proposed ban on factoring could have a huge impact on modest regular savers. Now the FSA has industry analysis and data on the corporate as well as the individual market we hope it will revisit its cost benefit analysis across both markets. We’re hopeful this will show the consumer benefits of retaining provider factoring far outweigh the costs.”