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Axa plans will pay within 1% structure

Axa Sun Life is to buck the trend set by rival life offices which are

paying high levels of commission on stakeholder-style plans.

The life office says its new individual and group personal pension plans,

to be launched in October, will pay commission within the 1 per cent

stakeholder charging structure.

The decision runs contrary to moves by rivals such as Scottish Amicable

and Scottish Mutual which have “stakeholder-style” pension plans paying

commission which is seen as unsupportable within the 1 per cent cap in the

medium term.

The new plans will offer a range of commission to suit IFAs but Axa Sun

Life says it aims to encourage IFAs to move away from up-front to

fund-based commission.

The plans will primarilybe aimed at companies looking to do “something

better” for their employees than stakeholder. But from next April the plans

can either remain as GPPs or be transferred to stakeholder.

Head of pensions development Paul Smith says: “We will be talking to IFAs

during July and launching the plans in October. The commission options on

the plans will all be within the 1 per cent cap.

“We do not believe you can pay 130 per cent of Lautro rates on a 1 per

cent charge. We believe it is pointless going down that route as those

companies will have to change their terms in the future.”

Scottish Equitable pensions development manager Steve Cameron says: “IFAs

should first assess how frequently full advice will be required. If it is

reasonably frequently, then a product with higher charges to cover the cost

of advice will be better for the investor.”

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