Adviser  >  News  >  March 2009  >  A new, clearer approach to pricing from Scottish Life

A new, clearer approach to pricing from Scottish Life

From 6 April 2009 we're launching a new, clearer pricing structure for our flagship individual pension plan - Pension Portfolio. We're also introducing a flat charge for our Individual Stakeholder Pension Plan.

In simple terms, we're reducing the charges for larger plans and increasing the charges for smaller plans - to reflect the relative cost of managing each. We're also introducing a straightforward charging structure that is clear and simple to understand, and adopting a transparent, RDR-friendly approach to charging for adviser payments.

Our individual pensions continue to offer you and your clients excellent value. You can confidently recommend our plans knowing that they offer a range of market-leading features designed to help your clients get the most out of their pension.

You will be able to illustrate on the new terms from Monday 6 April 2009.

What are we changing?

In depth

Download the following PDF guides for more information about our new charges:

1. Pension Portfolio (Personal Pension/SIPP/Drawdown)

We are making the following changes for new plans:

  • The basic charge is changing to 1% a year.

  • We're introducing a new, tiered discount of between 0.1% and 0.65% a year, based on fund size – reducing the management charge to as little as 0.35%. The new management charge will be significantly lower for all fund sizes above £25,0001.

  • The minimum payments are changing to £100 a month / £1,200 a year and £2,500 for single/transfer-in payments.

  • We are introducing a one-off transaction charge of £150 for using the integrated drawdown facility - Income Release.

  • We are unbundling the separate elements that make up the overall charges – increasing transparency and making it simpler for you to explain the charges to your clients.

2. Individual Stakeholder Pension Plan

For new plans we are moving to a simple, flat charge of 0.9% a year. If commission is taken the charge increases up to a maximum of 1%. The Individual Stakeholder Pension Plan is designed to be a simple, no-frills pension plan that's easy for clients to understand. The change to the charges reflects this.

Can my clients still get the current terms?

From Monday 6 April 2009 we will begin quoting on the new terms. If we have already quoted for business your clients can retain the existing charging structure, provided we receive the completed application form on or before Friday 1 May 2009 and the plan has fully completed on or before Monday 6 July 2009.

Why have we made these changes?

As a customer owned and commercially focused business organisation we take a long term view on pricing to create value for our customers.

Our new pricing structure reinforces our commitment to offering you and your clients quality pension solutions at competitive prices, rather than offering unsustainable terms to 'buy' unprofitable business. Yet, despite the difficult economic climate, our prudence means we're actually able to cut prices for many of our customers, your clients.

What's more, by simplifying our charging structure and making it more transparent it's easier for you to compare our charges against other providers and explain those charges to your clients.

So why recommend a Scottish Life pension?

Our pensions offer you and your clients excellent value, with market-leading features as standard: our new governed investment solutions, transparent and RDR friendly remuneration (Financial Adviser's Fee), integrated drawdown facility (Income Release)2 all supported by excellent customer service.

The FSA's review of pension switching has reinforced the need to be confident each individual recommendation is suitable for that particular client. In particular there is a requirement to focus on relative costs, appropriateness of new features, client's attitude to risk and need for ongoing reviews before making a recommendation to switch pension. We can help you with this:

  1. The pay-as-you-go design of our pensions means your clients only pay for services and features they use – something the regulator is very keen to see.

  2. Our risk profiling tool helps you to identify your client's attitude to investment risk - the first step in designing an investment portfolio.

  3. Our comprehensive annual review statement for Income Release provides all the information you need to conduct a regular review for your drawdown clients.

Want to know more?

If you'd like to find out more please contact your usual Scottish Life consultant or account manager.

You can also use our online illustration system to see how competitive our new charges are.

Notes:

  1. The management charge discount is based on the value of the Core Investments and excludes any Self Investments
  2. Income Release is only available with our Pension Portfolio.

For professional advisers only