Legal & General’s aggressive auto-enrolment charge cap lobbying has come under fire after it emerged the provider is refusing to offer pension scheme terms to small employers and those without high average contribution levels.
The provider has gained widespread national media coverage for its campaign to cap charges at 0.5 per cent for all auto-enrolment default funds. The Government has proposed three charge cap options – 0.75 per cent, 1 per cent or a two tier “comply or explain proposal”.
A Money Marketing reader attempting to place a new scheme with L&G last week was told of the strict criteria being applied, including the fact that it won’t offer a scheme for fewer than 50 members and that average monthly contributions need to be £200 per member.
In an email to the adviser, L&G said: “I regret to inform you that we shall be unable to offer you any terms for this prospect. This decision has been based predominantly on the fact that the minimum number of eligible members that we typically offer group pension scheme terms on is 50. We would also require a monthly average contribution of £200 per member.”
A second adviser, who asked not to be named, says L&G also told him it would only provide quotes for schemes with at least 50 eligible members, with either an average monthly member contribution charge of £200 from day 1 or using the L&G multi-asset fund with the employer paying £1,000 plus VAT.
Capital Management Solutions director Peter Angell says: “They are not putting their money where their mouth is and it smacks of hypocrisy.”
An L&G spokesman insists the communication was made in error and that the limits quoted are not in fact its policy.
Link to leader p.35