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Phoenix to spend £68m on exit fee changes

Phoenix Group estimates bringing in a cap on exit fees for non-workplace pensions will cost the business £68m.

In half-year results published today, the company says the move is in step with what it did for workplace pensions.

It introduced a cap on early exit fees for personal pensions including workplace pensions last year to comply with regulations on charges.

Phoenix plans to have the cap on non-workplace pensions in place by the end of 2019 but warns this will require significant changes to IT systems that have the potential to cause issues for customers.

All pots smaller than £5,000 that had charges in excess of 3 per cent per year will now be capped at that level with no exit charge applied, or at 1 per cent per year for workplace pensions.

All pots larger than £5,000 where charges exceeded 1.5 per cent per year will now be capped at that level, or at 1 per cent per year for workplace pensions.

These changes apply to 250,000 unit-linked policyholders out of a million, the remainder of whom already have charges below 1.5 per cent.

It also takes the total average annual charge across these million policyholders to 1.1 per cent and covers the Abbey Life book.

However the market value reductions in with-profits is not included in the cap.

Earlier in the week, Phoenix Life hit back at research from pension consolidator PensionBee claiming the provider is charging the biggest exit fees in the market.

The statement also included an update on the acquisition of Standard Life’s insurance arm, which is expected to complete by the end of month subject to regulatory approval.

Phoenix expects to generate a total of £5.5bn of additional aggregate cash flows from the acquisition, of which £1bn is expected to be generated between 2018 and 2022 and £4.5bn from 2023 onwards.

The Axa Wealth and Abbey Life integrations are finished, with savings of £27m per year and cumulative cash generation of £768m.

Some jobs were lost as a result of the Axa Wealth acquisition.

The group operating profit has remained steady with £216m generated in the first half of 2018 compared to £215m last year.

Group chief executive Clive Bannister says the completion of the Standard Life insurance business acquisition will bring growth opportunities from new business across both heritage and open books.



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There are 3 comments at the moment, we would love to hear your opinion too.

  1. All this talk about capping pension exit charges to 3% or less, I have an ill health client with an Abbey Life (Phoenix Holdings) pension looking to take benefits early or transfer out. Either way they are reducing the fund value from £40,800 to £33,750. That’s a whopping 17% in early exit charges…. How can they get away with that?

  2. What about all the other chicanery on other policies? Anyone know when an old Scottish Mutual with profits plan last payed a bonus?

  3. All sounds good, however on Phoenix NPI plans the “Exit Charge” is now called MVA ? as noted on a recent clients pension I will therm to quantify the MVA as the plan has been going since 1989 ?

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