Standard Life is introducing a single annual charge to its range of pension products that will push ...
Standard Life is introducing a single annual charge to its range of pension products that will push them all below the 1% stakeholder requirement.
The company's existing base of 750,000 pension policy holders will have their total charge cut to 0.825% or less and all customers for stakeholder, personal and group personal pensions will have a single annual charge expressed as a percentage of the fund.
The move is designed to emulate the single charge structure that applies to stakeholder pensions from April 2001 and new clients will benefit from a charging structure that ranges from 0.7-1% for all pensions with the option for higher, non-stakeholder, charges where the IFA specifically requires payment via commission.
Graham Storrie, assistant general manager of marketing at Standard Life, said estimates that the price reduction will cost the company £25m per year are inaccurate.
He said: "What we have to look at is not what these reductions will cost the company but how much it would cost if our existing clients decided to take their business elsewhere."
Assuming investment growth of 7%, a customer aged 45 who started a personal pension in 1995 with a fund of £10,000 and £150 monthly contributions would now receive more than £4,600 more on retirement at 60 under the new charging structure, according to Standard Life.
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