Changes to Pension Charges creating two funds

Larry_Wedlock

A problem has arisen regarding our Company pension. The problem we have got is as follows. We are currently in a Group Personal Pension Plan that is a Defined Contribution or Money Purchase scheme. You are probably aware that the contributions that are paid in by us and the Company are invested on the Stock Market and a pot of money is built up that you use to purchase a pension or other financial options.
The Government put in new regulations on how these schemes were to be charged for by the Pension Companies running them. Most of these Companies used commission based charges and these charges were largely hidden so it was difficult for members of these schemes to know the cost that they were incurring. The new regulations stated that commission based charges should be stopped and replaced by an upfront Annual Management Charge. The date for Pension Companies to change to the new regulations was by April 2016.
The Company Scheme that we are in is being run by Legal and General. They failed to comply with the new regulations and have only just tried to rectify the problem. They have decided to split member’s funds into two pots. The date they have chosen to do this from is April 2015.
This means that they have moved contributions from April 2015 into the new pot retrospectively with no prior warning given to members. This has led to numerous problems as the old commission charges used was 1% of the total pot and the new Management charge is 0.5%. A lot of members have complained. Their complaints include about things being done retrospectively, what has happened to the difference in the charges? Can contributions be moved into the new lower cost pot from the old pot? Are the two pots considered as different products? Is the pension scheme now fully compliant with the new regulations and many other problems?
There has been correspondence from Legal and General where they apologise for the poor communication but no recognition that they missed the deadline date for compliance to the new regulations.
We have sent an e-mail to the Pension Ombudsman a month ago and are waiting for a reply. Does anyone else have a similar problem?

xylophone

You might also have a word with TPAS.

https://www.pensionsadvisoryservice.org.uk/

If each member now has two separate DC pensions, in theory it should be possible to transfer one to the other if the provider permits - what do L&G have to say about the matter?

dunstonh

There has been correspondence from Legal and General where they apologise for the poor communication but no recognition that they missed the deadline date for compliance to the new regulations.

L&G didnt miss the deadline. The employer did.

What should have happened is the old scheme, if it could not be converted to meet auto-enrolment rules, it should have closed for new contributions and new auto-enrolment compliant scheme opened for future contributions.

The old contributions would remain in place under the old scheme with people free to move them where they like (subject to acceptance on the receiving scheme).

So, L&G seem to be doing exactly as expected of them.