Royal London has set out its plans for meeting the Government’s charge cap on auto-enrolment default funds and committed to continue paying adviser commissions until April 2016.
In April 2015 the provider will remove consultancy charges and re-price existing schemesb and apply the DWP’s 0.75 per cent cap on charges.
Prices will be set on a case-by-case basis and Royal London will levy an additional employer fee in some cases.
The firm confirms it did consider removing adviser commission in April 2015. But today it says it will continue to pay initial and trail commission for existing schemes until April 2016.
The provider adds it will incorporate an option to take an adviser charge from individual members’ plans, where advice is being given to scheme members.
Royal London is also reviewing default funds it supports and some employers will need to alter default options where there are additional fund management fees.
Intermediary chief executive Isobel Langton says: “These changes are driven by new legislation, which we need to make for our proposition to remain compliant.
“We looked closely at whether or not we should remove commission from April 2015, but have decided that the best way forward is to continue to pay commission until April 2016.
“This allows advisers more time to integrate these changes into their business models and highlights our support of the intermediary market.”