Head of pensions Dave Lowe says a small number of broker consultants have been told to offer advisers initial commission on group personal pensions business.
The pilot will wrap up once Zurich has hit its capacity with regards to scheme numbers. It will then decide whether to proceed in offering initial commission to the wider market.
Lowe says: “We are not looking to write tons of this stuff. We are running a very small pilot and when we reach a review point we will debate whether it is in our interest, consumers’ interest and advisers’ interests to take it forward.”
The move follows Axa’s decision to pull out of the market last month. Many firms have moved away from the initial commission model for corporate pensions because of the poor profitability of the business.
But Lowe says: “From our perspective, this business looks as though it could be profitable. We are looking at the profit models and whether we can deliver sensibly priced propositions to consumers and we think this is something worth investigating.”
Lowe admitted that the market had a shelf life given the RDR proposals.
He says: “We also have half an eye with what is going on with the RDR and the comments made in the previous publication around the banning of factoring means this has a very short shelf life in terms of what we do with it moving forward.”
Zurich has been involved in the market in the past although the firm has not offered initial commission to advisers for a number of years.