He asserts that IFAs and pension providers are in collusion over the distribution of group pension products featuring Active Member Discounts and that advisers who advocate AMDs should ‘examine their conscience’.
As a corporate IFA, striving to do the right thing for my clients, I take great exception to this. Firstly, he suggests that affording members of our clients’ schemes a lower annual management charge while they are employed is a bad thing. Secondly he insinuates that in launching the schemes to members, there is not complete clarity about the structure of the scheme and the options for the member on leaving. Thirdly, he assumes that no formal ‘leavers process’ exists to advise GPP ex-members on how to transfer to alternative pensions or joining their new employer’s scheme.
Finally, he makes no mention of the fact that under the rules of some AMD schemes, leavers can continue to enjoy the lower charges by continuing to make nominal personal contributions (from as little as £20 per month), thereby encouraging them to maintain their pension savings habits.
If by ‘racket’ he means offering my corporate clients and pension members lower charges than can often be achieved through a flat annual management charge, then my conscience is clear.
Opinions such as this do little to reassure corporate clients of the benefits of taking advice.
Nick McMenemy, corporate consultant Morgans Corporate Benefits