View more on these topics

Standard Life in talks with FCA over pension default concerns

FCA logo new 3 620x430

Standard Life is in talks with the Government and the FCA over concerns its old default funds remain targeted at annuity purchase.

A report by the provider’s Independent Governance Committee, published today, reveals worries historic default strategies “either do not have a lifestyle design or have a design which remains targeted at annuity purchase despite the introduction of the pension freedoms”.

It adds: “We have asked Standard Life to amend these default strategies to match the lifestyle profiles incorporated in the current pension products.”

In its response, Standard Life says it is “aware of and acknowledges the issues in relation to people still invested in lifestyle strategies targeted towards annuity purchase”.

However, the firm says: “The contracts we have in place do not allow Standard Life to take investment decisions (either redirecting future contributions or switching existing funds) on members’ behalf.

“However, we are in agreement that this action will be in the best interests of the majority of members so we are actively engaging with both the FCA and the Department for Work and Pensions to find a solution to this problem that will allow providers to move members into more appropriate solutions and hope to be able to agree a way forward soon.

“In the meantime, we have started a programme of communications with relevant members to ensure they are aware of their options to initiate their own investment switches, should they wish to do so.”

The FCA declined to comment.

The pension freedoms have presented a significant investment challenge to all providers.

While previously default strategies were geared around annuity purchase, the reforms introduced in April last year have shifted consumer behaviour, resulting in almost £6bn being withdrawn from pensions either through drawdown or via cash lump-sums in the first nine months.

This has forced insurers to wrestle with the problem of how to design appropriate default decumulation strategies given the raft of retirement income options now available to members.



Watchdog ‘disappointed’ over L&G failure to cap exit charges

Legal & General’s independent governance committee has hit out at the insurer’s slow progress in addressing consumer detriment. While non-automatic enrolment schemes will have charges capped at 1 per cent, no agreement was reached on exit fees. In the hardest hitting report yet produced, the IGC said it was “disappointed at the time it has […]


Pru scraps workplace exit fees and cuts charges 15%

Prudential is to scrap all exit penalties for its workplace pension customers and reduce charges by an average of 15 per cent. The move comes as part of the insurer’s independence governance committee’s first annual statement and follows Money Marketing’s revelation earlier this month that Standard Life and Prudential were planning to cap exit fees. […]


Royal London faces £15m hit in governance crackdown

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 […]

Providers to slash exit fees and extend loyalty payments after FCA governance crackdown

Royal London is extending loyalty bonus structures for thousands of customers with legacy policies while another provider is set to cut exit fees following recommendations by new Independent Governance Committees, Money Marketing can reveal. PTL director Richard Butcher – who sits on the IGCs of Standard Life, Old Mutual Wealth and a governance advisory arrangement […]


White paper — Dubai International Insights

Jelf Employee Benefits discusses the legislative changes in Dubai, available medical facilities and policy considerations for employers with expatriate workforces in the country. This edition will be of particular interest to global human resource directors, compensation and benefits specialists and mobility managers who have employee populations in Dubai, or are considering operating there in the near future.


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. So are we saying that any default which implies a specific change of investment over time does not align with the issue regarding investment decisions taken on behalf of clients?
    I think the comment re annuity purchase is a red herring, however, it does seem to me that this argument cold be levelled at any managed fund which allows any leeway in allocation to different assets within a range. One could argue that moving out on the equity assets at the expense of a reduction in fixed interest say could well reflect a change in investment direction which did not necessarily align with what the member signed up for in the first place.

    Alternatively if the managed fund is OK then surely the lifestyle approach is as both approaches were clarified at outset.

    Unintended consequences eh? Quite incredible how the Government and regulatory bodies manage to create complications out of nothing simply because they don’t have a clue about what they are doing.

    Ian Coley

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm