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Axa links commission to GPP profitability

Axa is to tie the level of commission it will pay on group pension schemes to their profitability and persistency.

The insurer’s current standard commission rates will be used as a benchmark with advisers receiving commensurately less commission on less profitable schemes. This means IFA remuneration on every Axa group scheme will be dealt with on a case by case basis and follows similar moves by other product providers.

The key determinant for the firm will be persistency. Axa is aiming for schemes with between 250 and 5,000 members and says commission for schemes of this size with good persistency rates will typically see commission unchanged.

The company will turn away unprofitable business and pay zero commission on any minimally profitable schemes it takes on.

Axa spokesman Steve Muir says the group is keen to build on its success in the group pensions market and will adopt a more”scientific” approach to its commission strategy.

He says: “We do not want to cloud our book with expensive to run, unprofitable business. It is not a question of cutting costs but of enhancing profitability. Good terms will be available to those IFAs who bring us quality business.”

Hargreaves Lansdown head of pension research Tom McPhail says: “All the pressure on commission appears downwards and many companies are moving to payment by a case-by-case basis.”

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