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Origen set for up to 5% on outsource annuities

Partnership Assurance and Legal & General are set to pay Origen Financial Services commission of 5 per cent and 2.5 per cent respectively under the annuity outsourcing deal which the firms are launching in March, Money Marketing understands.

MM revealed earlier this month that Origen had agreed to pass corporate annuity clients with pension funds worth less than £50,000 to L&G and Partnership.

Directly Financial director Stuart Bayliss says the commission rates are about 70 per cent higher than those normally available for specialist advisers providing whole of market solutions.

Specialist retirement advisers get around 1.5 per cent commission on conventional annuities while general IFAs get 1 per cent.

For enhanced annuities, specialists get up to 3 per cent while non-specialist advisers get 1.5 per cent.

Under the deal, Origen will search the open market if requested by a client but those who do not request advice will be channelled to either L&G or Partnership.

Bayliss says: “Annuities are a pooled product. Commission levels of this size are bound to penalise customers and my customers will be among those who will pay for Origen’s commission.”

An Origen spokesman says: “The commercial agreements for this solution have not been finalised but whatever level is agreed will not have an impact on the market annuity rate.

“Origen does get preferential rates because of the larger volumes of business we place along with greater member communication, processing and administration than is undertaken by certain specialist smaller annuity IFAs.”

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. 350,000 should read £50,000 I think

  2. It’s nice to see that Origen feel that they can justify the increased commission due to “greater member communication.” I am a retirement specialist and my communication with clients is of utmost importance. Can I increase my fees by 70% please?

  3. So they can earn up to £2,500 without providing a whole of market service. I wonder if clients will swallow that?

  4. David Trenner - Intelligent Pensions 18th February 2010 at 4:37 pm

    “So they can earn up to £2,500 without providing a whole of market service. I wonder if clients will swallow that?”

    Of course they will! Besides anything else they do not realise that Origen are making £2,500 because they are probably dealing through their employer.

    Members of pension schemes seem totally unable to understand the whole concept of OMOs. They simply would not believe that L&G’s rates could be 5% below the best available, meaning that they could be getting hundreds of pounds less income over their years of retirement.

  5. This is not a recent article, but interesting to know the commision rates…

  6. This is not a recent article, but interesting to see the commission rates

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