Dunbar in monthly pension charge for tied advice

Allied Dunbar is to start charging investors £2.75 a month for tied advice on its stakeholder-friendly pensions.

The move, which has won praise from independent advisers, will see the charge become an integral part of the product although it will fall outside the 1 per cent annual man-agement charging cap stipulated under stakeholder pensions.

Many independent advisers believe this could be the way forward for the rest of the industry.

Dunbar&#39s individual pension plan and group plan, launched last week, will have 100 per cent allocation, a 1 per cent fund-based charge and no trans- fer out charges.

The minimum monthly investment is £50.

On a £600 annual investment, equivalent to £50 a month, Dunbar&#39s £2.75 a month advice charge would amount to £33 or 5.5 per cent of the annual investment.

Zurich Financial Services press officer Sandra Paul says: “We decided on our advisers&#39 remuneration package after extensive research carried out at the start of the year.

“We found that a monthly fee was the most acceptable way to charge for advice in the eyes of consumers.”

IFA Torquil Clark pensions development manager Tom McPhail says: “It is an ingenious solution.

“It is amazing how the market manages to find solutions by passing stakeholder pension rules. Others will go down this route, for sure.”