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.”