AEGON Industry Blog

The link between Active Member Discounts and Small Pots

Tue, 31 Jan 2012 12:00:25 +0000

On 25 January, Steve Webb gave evidence to the Work and Pensions Select Committee’s Inquiry into auto-enrolment. Alongside the headline announcement about the changes to staging dates Kate blogged on last week, he indicated he’s no longer planning to legislate specifically against Active Member Discounts (AMD). While it would be wrong to suggest he’s now a supporter of these (and they do tend to divide opinion), he instead plans to tackle the underlying issue of members leaving behind small deferred pots when they change jobs. He has also retained the power to cap charges, but that’s about levels, not particular shapes.This is very welcome. AEGON has highlighted why the AMD charging approach is a valid and attractive option for many employers and advisers who don’t like cross-subsidies from stayers to leavers. Many want to reward, rather than effectively penalise, those who stay in their employment long-term. The AMD approach was designed with this in mind and we’re keen to continue to offer this alongside other charging shapes.

Pensions Reform: More staging dates is good news for employers and advisers

Thu, 26 Jan 2012 11:31:38 +0000

The last session of the Work and Pensions Select Committee Inquiry into automatic enrolment and NEST took place yesterday, and the special guest was Steve Webb, the Pensions Minister. Given the October announcement on the delay to the automatic enrolment timetable for all employers with more than 3,000 employees I was eagerly waiting to hear what he was going to say. Webb reconfirmed that automatic enrolment will start from 1 October 2012 as planned. And all employers with staging dates on or before 1 February 2014, that’s those with more than 250 employees, will keep their original staging dates. This gives certainty for these employers, many of whom will already be taking advice on how to comply with their new responsibilities.

RDR : Could we lose trail as well as legacy commission?

Mon, 16 Jan 2012 11:15:20 +0000

Who’d have thought we’d still be responding to an RDR consultation in 2012 – especially one as potentially wide-reaching as that on legacy assets. Responses to Consultation Paper 11/26 were due in on 16 January. This CP is the FSA’s response to widespread confusion over how to interpret rules around legacy commission. AEGON assumed we’d be able to pay commission on increments to pre-RDR policies, and we certainly weren’t alone. The CP confirmed we, and others, had misunderstood FSA intentions. For individual retail investment products, if there’s advice on the increment, we can’t pay ‘legacy commission’. If there’s no advice, ironically we can. For pre-RDR Group Personal Pensions, we can continue to pay commission on increments and new joiners. While we don’t like the decision for individual, at least we now have clarity and can get on with planning another batch of RDR systems changes.

Pensions Reform: Smoother staging dates

Tue, 10 Jan 2012 10:07:31 +0000

Last November I wrote about the delay in the automatic enrolment timetable for employers with fewer than 3,000 employees. The UK’s largest employers with staging dates between 1 October 2012 and 1 July 2013 won’t be affected by the delay, but all other employers are likely to have a later staging date.When the delay was first announced much of the pension industry expressed dismay as the auto-enrolment policy seemed to be unravelling. The government has promised to publish new staging dates, which it may consult on, early in the New Year. However, there is some concern that a future government may decide to exclude employers with fewer than 50 employees, as this group’s staging date will now be after the next election in May 2015.

RDR : A Shared Approach to Adviser and Consultancy Charging

Thu, 05 Jan 2012 11:43:13 +0000

Whatever your interest in the Retail Distribution Review, I’d encourage you to have a read of ‘A Shared Approach to Adviser and Consultancy Charging’. AEGON has been working on this initiative with four other providers for a number of months now, with facilitation from Deloitte and valuable input throughout from the Sesame Bankhall Group.AEGON is well advanced in our RDR implementation. We’ve just announced details of our Adviser and Consultancy Charging shapes. These, and our overall approach to RDR, have been driven by discussing with advisers what they want and need. This is vital – we’ll not be ‘RDR ready’ unless we deliver what advisers and their customers need.

RDR: We’re nearly there….

Wed, 21 Dec 2011 13:52:53 +0000

There’s now just a year to go before the RDR comes in and we still don’t have all the FSA’s final requirements. Here are a few things to look out for on our 2012 RDR journey.A question often asked is will the RDR go ahead at the end of 2012? While the FSA has said that it will review and assess progress, it won’t change the main date now and we should all be planning on that basis. AEGON certainly is. But we may see some flexibility on a few of the outstanding points.

DC Principles: Six is the magic number!

Thu, 15 Dec 2011 10:10:16 +0000

The number six appears to be a recurring theme in defined contribution (DC) pension regulation. We have the FSA’s six Treating Customer Fairly (TCF) outcomes, the Investment Governance Group’s six DC investment principles, and earlier this year the Pensions Regulator identified six good outcomes for DC members. The latest addition is the six DC principles for workplace schemes published by the Pensions Regulator last week.It’s widely recognised that the vast majority of employers will use some type of DC scheme to meet their automatic enrolment responsibilities from 2012. So the Pensions Regulator wants to make sure that its regulatory approach is ‘fit for purpose’ for the new era, while at the same time improving standards across all DC schemes.

Delay in the automatic enrolment timetable

Tue, 29 Nov 2011 17:33:17 +0000

Today’s Autumn Statement set out a package of measures to generate economic growth in the UK. But it also included a couple of important pension announcements, one welcome, the other probably less so. The Basic State Pension (BSP) will increase by 5.2%, up by £5.30 to £107.45 a week in April 2012. This is the biggest ever cash rise in the BSP. The Chancellor also confirmed the rumours of yet another increase in the State Pension Age (SPA) to age 67, rising in steps between April 2026 and April 2028. This demonstrates the need for people to build up adequate private savings giving them the flexibility to receive a pension income when they are ready to stop working, rather than waiting until age 67.We’re all aware that not enough people save in a pension scheme. So it was a bit of a shock when the Pensions Minister announced a delay in the automatic enrolment timetable for smaller employers.

The autumn statement – pension tax relief under attack – again?

Tue, 22 Nov 2011 10:50:09 +0000

The Autumn Statement takes place on Tuesday 29 November and we expect the focus to be on stimulating growth rather than further austerity measures. Despite this, there are rumours that the government is looking once again at raising money from changing or removing some pension tax reliefs, specifically the removal of higher rate relief on contributions or capping tax-free lump sums paid at retirement. The temptation to tinker with the pension tax regime has been overpowering for UK governments in recent years. The latest changes haven’t even been fully implemented yet - the reduced annual allowance of £50,000 was only implemented last April, and the lower lifetime allowance takes effect from April 2012. The worry is pension tax reliefs are seen as a soft target for short-term cash raising.

RDR – the legacy commission ban

Thu, 17 Nov 2011 12:29:35 +0000

Regrettably, but as expected, the FSA has announced it’s sticking with its ban on legacy commission for individual retail investment products. In other words, from 31 December 2012 (with no hoped-for transitional period), new commission can’t be paid where a personal recommendation is given on a pre-RDR policy or investment. AEGON has consistently argued against this ban, highlighting the likely consumer detriment it will produce as well as adviser complexity and unnecessary provider costs. But the Consultation Paper (CP11/26) is not asking for views on the ban itself or the timetable – it’s simply consulting on some proposed guidance which seeks to clarify when commission can and can’t be paid across life and pension products and collective investments.