Royal London is to give up fees worth around £15m after making changes to its pension products following recommendations made by its Independent Governance Committee.
This equates to a 20 per cent cut in charges on affected workplace pension schemes, while the changes will benefit over 27,000 workplace pension customers says Royal London.
The IGC’s first annual report – published today – reveals a raft of changes made as a result of the committee’s intervention.
The mutual plans to remove a fixed fee added to paid-up members’ policies, meaning 24,100 customers will have lower charges.
In addition, 18,100 people are expected to benefit from changes to a product that has a little used provision that waives exit charges if customers move their money within three months of leaving a company.
Plans that have exit charges in place to recoup legacy commission payments made to advisers will be capped at the cost of the commission.
In addition, the firm is extending the scope of loyalty bonus structures, as revealed by Money Marketing last week.
The changes are set to cost the firm £15m and represent a 20 per cent cut in fees for affected workplace schemes.
IGC chair Phil Green says: “I am very pleased that Royal London has taken such a positive approach to the findings of my committee. The company has assisted us throughout the process, making the complex task of weighing-up the value for money offered to members by Royal London’s book of workplace pensions a lot easier.
“They have given us access to detailed management information and the committee has been able to review the comments of actual customers as part of the evaluation. This has enabled us to consider the benefits and quality of the workplace pensions provided, not just their costs.”
He adds: “The committee does not see this first review as a one-off exercise and we expect continually to challenge Royal London to evaluate and improve its workplace pensions.”
Royal London director of policy Steve Webb says: “We firmly believe it is vital that we offer our workplace pension members all-round good value for money. Many members of our workplace pension schemes are also mutual members of Royal London and so will benefit from the Profit Share arrangement that we announced last year.
“Royal London was already reviewing the value for money of our existing workplace pensions before the IGC was set up. The Royal London IGC brings objectivity and a fresh pair of eyes to this work.”
All insurers with workplace pensions are required to have IGCs who in turn must produce annual statements in April.