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 taken to provide the IGC with meaningful management information”.
IGCs were launched in April 2015 to evaluate the value for money received by members of workplace pension schemes.
Money Marketing previously revealed moves by Standard Life and Prudential in capping exit penalties. Scottish Widows also plans to scrap exit fees entirely from its workplace book.
But the report reveals L&G has not reached an agreement with the committee over how to tackle policies that charge customers who break contracts early.
However, total charges on product in the workplace division are being capped at 1 per cent, representing an average reduction of 0.38 per cent.
Yet legacy schemes in the mature savings division will only be subject to a voluntary charge cap of 1 per cent.
In all, the cuts to charges will cost L&G £1m.
In addition, IGC chair Paul Trickett suggests a “wholesale transfer” of old policies to new products may be in the best interests of the majority of members.
The report adds: “There have been, in the opinion of the IGC, opportunities for Legal & General to lead the way in encouraging the right value for money approach across the industry and these opportunities were not taken, despite challenge from the IGC.
“We understand that there are commercial sensitivities that need to be considered but sometimes these need to be disregarded in the interest of the member.”
The IGC has also committed to review all default funds and publish administration performance standards every six months. It will host the first annual members forum in October 2016.
Legal & General Investment Management head of DC distribution Emma Douglas says: “Legal & General was the first pension provider to set up an IGC, several months in advance of government legislation, and we appreciate the challenges they’ve set us.
“It’s exactly this kind of constructive feedback that helps us to improve our products and services and it shows the value of true independent governance.”