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NU axes initial charges and boosts pension commission

Norwich Union is to scrap initial charges and boost commission in a bid to improve individual personal pension sales and switch its focus to higher-net-worth customers.

The company revamped its pension strategy last October by writing all new pension policies under a single scheme and allowing customers to switch easily between products.

Director of pensions Angela MacDonald says individual pension sales have been hampered by initial charges and advisers struggling to differentiate between its Your Pension Select, personal pension and stakeholder products.

As well as scrapping initial charges, minimum monthly payments will be doubled from 100 to 200 and minimum lump-sum payments will be doubled from 5,000 to 10,000.

Big fund discounts will be cut to offset the removal of the initial charges and NU is introducing stricter clawback terms to discourage churning.

Enhanced commission will be offered from September 25, 2006 until March 31, 2007.

MacDonald says the changes are designed to attract more loyal, higher-premium customers and break away from the declining stakeholder market in the run up to an NPSS-style savings scheme.

Informed Choice managing director Nick Bamford supports the removal of the initial charge but says: “Norwich Union still seems to want to buy market share by offering enhanced commission terms. It is interesting that it is doing this because received wisdom is that indemnity commission is not long for this world.”

MacDonald says: “Our individual personal pension has been out of favour and drifting down very gently. Offering good commission terms is a way of making us get noticed again but it is not part of our long-term strategy.”


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As we approach the two-year milestone of auto-enrolment, employers have had the opportunity to truly assess the capabilities of their chosen support. They are also now realising that getting to the staging date was the easy part, and that support is required for almost every aspect of the day to day running of their scheme. With the three-year re-enrolment window coinciding for many with the total removal of commission and Active Member Discounts from pension-related products and services, as well as the introduction of the pension charge cap in April 2015, many employers will have no choice but to review their support options. But, what is involved in transitioning your auto-enrolment scheme away from your current support options? This guide from Johnson Fleming aims to outline some of these key areas and provide information and discussion points on what you need to consider.


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