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Phoenix to waive pension charges for a year

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Closed-book firm Phoenix Life is to waive ongoing charges for around 50,000 pension customers after its independent governance committee raised concerns over value for money.

However, the IGC has decided not to tackle exit penalties this year while the FCA consults on the issue, and notes only 15 per cent of customers have policies that contain these charges.

In recent days several providers have announced cuts to exit penalties and paid-up charges in the wake of the first wave of IGC reports.

Phoenix’s committee found 21 of Phoenix’s 44 different scheme designs have members likely to pay over 1.5 per cent in ongoing charges.

Customers with small pots – under £5,000 or in some cases £10,000 – and where no new contributions are being made are at higher risk of poor value for money, the IGC says.

In response, Phoenix will not collect ongoing charges for the next 12 months for customers with this profile and who are under 54.

There are around 46,000 customers under 55 with pots worth less than £10,000.

The committee gave charges and costs a red rating “in order to highlight the importance of resolving the situation for the smaller pots”.

In addition, the value for money of investments was given an amber rating as “not all funds are performing in line with the targets”.

However, retirement options, customer feedback and customer service and communications were rated green.

IGC chairman David Hare says: “The committee has taken a wide-ranging approach to assessing value for money, looking not just at what charges apply to customer pension pots, but also to what customers are getting in return. We are pleased that Phoenix has responded to our concerns and is temporarily stopping those charges that caused us most concern.  We look forward to seeing what longer-term options they are able to offer.”

Phoenix Life chief executive Andy Moss says: “The IGC has provided a useful, fully independent review of our workplace pension schemes.

“We are pleased that our commitment to customer care has been recognised and that most of our workplace pension schemes are working well for their members. We look forward to continuing our work with the IGC on developing longer-term solutions to improve value for money.”

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Comments

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

  1. I understand why the focus is on poor value pensions but let’s not forget there are an awful lot of poor value life and savings products too. When will something be done about those??

  2. Surely the charges were explained when advice was given.

    Also customers are given projections and details of past performance, but told this is not a guarantee of future performance.

  3. @ Dave Bennett – Agreed.

    The FCA et al will not be satisfied until the entire industry has been regulated beyond existence. The whole ‘compliance” costs keep going up and up and up yet they want everyone to make less and less by reducing their charges and their costs.
    Whilst I feel sorry for those who are invested in low value, high charging pensions but we are where we are and customers will still be way better of in these than they would have been if they had taken no action initially.
    The fact the regulator and government are now enforcing a retrospective change in contract law and not only does that hack me off but it is setting such a dangerous precedent for whatever is going come next.

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