Skandia has unveiled a new pension range designed to cater for the payment of IFAs through commission, fees or a combination of both.
The Series six single price pension range will run alongside the existing pension range that has an initial charge. The new range has no initial charge and enables IFAs to separate the costs of the pension wrapper, the investment funds and advice to the client where commission is preferred.
One of the products in the range is the Series Six personal pension - single charge, an individual personal pension. A 0.75 per cent product annual charge is levied on fund values of less than £50,000, which reduces to 0.25 per cent for fund values above £50,000.
A commission annual management charge of up to 1 per cent may be added to bring the overall annual charges up to a maximum of 1.75 per cent. This 1per cent charge makes it possible for IFAs to take initial commission of up to 3 per cent plus 0.5 per cent fund based renewal or fund-based commission of 1 per cent a year. Where a client opts to pay fees, only the product annual management charge and fund management charges will apply.
Changes in the pension market as a result of the Sandler report and the move towards depolarisation has put the issues of charges and meeting the cost of advice high on the agenda. Scottish Life recently took this on board when it established a single charge individual pension range which includes an individual personal pension.
The Scottish Life pension has a flexible charging and commission structure that goes beyond a 1 per cent charge to allow for the payment of advice. While Scottish Life has a level commission option that Skandia lacks, advisers may find Skandia's structure easier to explain to clients because the different strands are clearly separated.