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Budget threat to £15m Partnership/Openwork deal

Openwork could receive less than the £15m agreed as part of the controversial single-tie annuity deal agreed with Partnership last year in the wake of the pensions overhaul announced in the Budget.

Money Marketing revealed last April that Openwork is set to receive up to £15m from Partnership under an arrangement which requires Partnership to offer an annuity rate equal to the average of the top five on the open market.

Under the terms of the deal, Openwork has been paid up to £8.25m from Partnership to develop a bespoke administration system to support the tie-up. The deal also sees Partnership pay up to £1.4m a year for five years for ongoing services.

Following the reforms set out in the Budget, Partnership admits future payments to Openwork could be affected if Partnership decides to reduce marketing and events activity through the network.

A spokeswoman says: “The Openwork agreement is not linked to volumes. However, it does encompass delivery of certain services such as marketing. 

“Therefore, should those services change or decrease or be of less relevance to Partnership then the payments would change. This is a standard term in many commercial contracts and there are no plans at the moment to make any changes.”

Openwork says it does not expect any change in payments.

Partnership shares fell over 50 per cent on the day of the Budget announcement.

In September the company confirmed it was being investigated by the FCA over inducements.

Plan Money director Peter Chadborn says: “There are questions around these arrangements between distributors and providers.”


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