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Commission cost concern at Standardised pensions

Standard Life is set to reprice more of its pension contracts on stakeholder terms, sparking claims it is holding a closing-down sale to drum up business before the change.

It is believed to be offering IFAs commission of up to 140 per cent of Lautro rates on contracted-in money purchase schemes to write business now before it lowers its charges.

Standard was criticised by IFAs for using the same tactic in the run-up to stakeholder when it announced it was changing its GPP contracts to stakeholder-style levels.

The company says it is unfair to penalise existing customers with higher charges following the introduction of stakeholder and will announce repricing plans next month. It says a period of transition where old charges apply is inevitable.

IFAs are raising questions over how the commission is funded and whether with-profits policyholders are paying for Standard&#39s aggressive tactics.

Richard Jacobs Pension & Trustee Services director Richard Jacobs says: “This looks like a closing down sale. This is buying business at its worst.”

Informed Choice managing director Nick Bamford says: “Standard&#39s switch to stakeholder charges on GPPs was a tremendously positive move for customers. But the opportunity to receive commission on old charging structures was exploited. Who pays for it and what are the long-term effects? Standard will have had to cost this thoroughly.”

Standard Life assistant general manager (marketing) Simon Douglas says: “There is no intentional plan to create a window of opportunity to incentivise IFAs to sell business. When you are making changes to contract terms, you put in place pipeline operations which give IFAs time to adjust.”


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