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Aegon pays 25% initial cash on GPP

Aegon Scottish Equitable is paying up to 25 per cent initial commission for group personal pension business.

Money Marketing has learnt that Aegon recently secured a deal worth around £500,000 in annual premiums at a 25 per cent rate of initial commission, meaning the adviser will get around £125,000 for writing the business.

Aviva, through its Norwich Union brand, also bid for the scheme but offered 15 per cent initial commission.

Scottish Widows is the only other firm still offering initial commission on GPPs, although Zurich is piloting initial commission on a small number of schemes. Norwich Union came out in strong support of the commission model last month after Axa pulled out of the market, saying the business was not profitable.

Friends Provident stopped paying initial commission as part of its strategic review early last year and firms such as Standard Life, Prudential and Royal London have been out of the market for some time.

Insurers have pulled out because of the strain that initial commission puts on capital. GPP business generally takes around 20 years to break even, according to Cazalet Consulting.

An Aegon spokesman could not comment on the specific scheme but says: “Twenty-five per cent commission is feasible but this is definitely at the high end of the spectrum. Aegon underwrites each scheme separately and we will factor in varying aspects.

“This approach is common in the marketplace and we do not believe that we are out of line with other initial commission providers. However, there will be instances where we are offering higher levels of commission and vice versa. It just depends on the factors used in determining commission and the relative importance that they carry.”

Affluent Financial Planning managing director Carl Melvin says: “The most important factor is whether or not the costs have been transparent. So long as these are fully disclosed and the terms of the deal are favourable for employees, I do not see a problem with this.”


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