Life offices say they may introduce an up-front charge on stakeholder pensions if it is decided that personal accounts are to operate under a hybrid charging structure.
Scottish Widows head of pensions market development Ian Naismith says if the Personal Accounts Delivery Authority chooses to run personal accounts with a combination of an initial charge and an annual management charge, it could lead stakeholder providers to do the same.
Naismith says: “It is encouraging that Pada is looking at an up-front charge as well as an AMC. This would be beneficial for stakeholder because it could mean we extend an initial charge to these contracts.”
Legal & General wealth policy director Adrian Boulding says charging structures are going to be key to medium-sized employers deciding whether to go with personal accounts or carrying on with their group personal pension or stakeholder schemes.
He says: “What personal accounts do on the charging structure is going to shape what happens in our marketplace.
“Essentially, it will be driven by the customer. If the customer wants single-charge products, then we will supply this and it may be that we will outsell personal accounts. But if personal accounts adopt a multi-charge structure and the customer likes that, then the rest of the market will go that way.”
Aegon head of pensions development Rachel Vahey says: “I do think that the rationale for stakeholder sch eme charges to stay how they are is not strong if personal accounts adopt a different type of charge. Essentially, they are exactly the same product – a low-charged pension plan.”