AMC’s changing after confirmation that they would stay at previous level

Slider

I have a pension which up until July 2020 had been part of a company scheme.

In July, the company ceased its relationship with the pension provider, and started a new Master Trust scheme with SEI

March 2021, original pension company has written to say that the previous scheme has closed and we have been moved to our individual plans.

In the written letter, they confirm that AMC charges will remain at previous levels. I called on March 11th to confirm that all is ok to keep making additional ad-hoc contributions, and this was confirmed, and again the AMC rate was confirmed as staying at previous level

I made an additional contribution at year end to use last of my 40k limit (around 7k). The provider has confirmed receipt of the monies, but is now saying that the AMC charge will increase, and that the documentation confirming that the AMC would not change was an error

AMC was 0.29/0.35 for the 2 funds. Each fund will increase by 0.25 to 0.54 and 0.6

1) Do I have any options to prevent this increase?

 Fund value is approx 250k, 12 years till retirement. 

Marcon

Slider said:

I have a pension which up until July 2020 had been part of a company scheme.

In July, the company ceased its relationship with the pension provider, and started a new Master Trust scheme with SEI

March 2021, original pension company has written to say that the previous scheme has closed and we have been moved to our individual plans.

In the written letter, they confirm that AMC charges will remain at previous levels. I called on March 11th to confirm that all is ok to keep making additional ad-hoc contributions, and this was confirmed, and again the AMC rate was confirmed as staying at previous level

I made an additional contribution at year end to use last of my 40k limit (around 7k). The provider has confirmed receipt of the monies, but is now saying that the AMC charge will increase, and that the documentation confirming that the AMC would not change was an error

AMC was 0.29/0.35 for the 2 funds. Each fund will increase by 0.25 to 0.54 and 0.6

1) Do I have any options to prevent this increase?

 Fund value is approx 250k, 12 years till retirement. 

No, but you have the option to switch to different fund choices. You might be able to argue they should hold the fees for a year by way of apology for their error - nothing lost by asking.

Slider

Marcon said:

No, but you have the option to switch to different fund choices. You might be able to argue they should hold the fees for a year by way of apology for their error - nothing lost by asking.

I would find it very difficult to accept, that a pension provider can confirm in writing and verbally that the AMC's wont change, and then change them without telling you.

I believe they should be bound slightly tighter than you suggest to the written information that they provide.

There will be around 100 people effected by their behaviour

Marcon

Slider said:

Marcon said:

No, but you have the option to switch to different fund choices. You might be able to argue they should hold the fees for a year by way of apology for their error - nothing lost by asking.

I would find it very difficult to accept, that a pension provider can confirm in writing and verbally that the AMC's wont change, and then change them without telling you.

I believe they should be bound slightly tighter than you suggest to the written information that they provide.

There will be around 100 people effected by their behaviour

You may find it difficult to accept, and I can understand your annoyance, but I'm afraid that's the position.

jamesd

It used to be routine practice for charges to increase after employees ceased being part of an associated workplace scheme. The discount would be removed. This was banned a few years ago for new workplace schemes but existing ones could keep the condition. Some schemes, like Standard Life, keep the old charges until the former member of an employment scheme makes a change.


As a member, your primary source of information about which applies is the pension provider and you can expect that they will provide accurate information.


You checked in writing and verbally and were told that yours was of the more modern type that would not be affected by changes.

Complain in writing and ask them to put you in the position that you would be in if they had not misinformed you by

1. Setting the charges as they were including for the new money or

2. Switching the new money to a new plan at current rates and setting the charges as they were for the original amount or

3. Leaving the charges higher and paying you an annual rebate of the difference or

4. Paying you a lump sum equal to the estimated charge difference for the whole of the next twelve years or

5. Any other solution that puts you in your original charging position.

If they decline, make an ombudsman complaint.

Even if they do 1 or 2 the normal plan terms will cause an increase in charges for any newly used investment and possibly the original one or all of them. What happens depends on implementation details and the only way to reliably avoid it, if it's possible at all, is to make no changes to any investments that you have.


It appears that they may have tried to address the issue by moving you all to individual plans so that you'd all be on new and higher charges, without directly involving the banned practice. I don't know what the charge maintaining requirements are in that forced switch case. Any redress payment would be limited to the few months at the higher charges and to avoid them in the future you'd need to switch to another pension.

I have much of my own money in a scheme with a workplace discount of 0.75%. If that was to change I'd naturally switch to a different scheme to get better charges. Switching is also one of your options.

Marcon

Mistakes happen and the ombudsman recognises that. OP has suffered no actual financial loss; has the opportunity to change to a different fund; and (I would wager) the terms of the Master Trust contain a clause that fund charges can be reviewed and changed at any time.

The chances of the ombudsman awarding compensation for 'distress and disappointment ' are minimal, given the above. 

Albermarle

Some schemes, like Standard Life, keep the old charges until the former member of an employment scheme makes a change.

For info , I have an old SL pension ( SERPS related one started about 30 years ago) After not adding it to it for some years , I wanted to make  a lump sum contribution . They had to do some internal admin work to convert it into a fully personal pension and take the original employers name out of the system . However they agreed to maintain the 0.55% discount.

The pension does not have drawdown facilities and would need to be transferred to a new SL pension . When I asked will I keep the discount ? the answer was 'not directly but new arrangements to be discussed at the time ' 

I suspect as it is reasonably significant sum and I am classed as a Priority customer then they will be flexible. Especially if I mention moving to I web or Vanguard or similar.

Slider

Marcon said:

Slider said:

Marcon said:

No, but you have the option to switch to different fund choices. You might be able to argue they should hold the fees for a year by way of apology for their error - nothing lost by asking.

I would find it very difficult to accept, that a pension provider can confirm in writing and verbally that the AMC's wont change, and then change them without telling you.

I believe they should be bound slightly tighter than you suggest to the written information that they provide.

There will be around 100 people effected by their behaviour

You may find it difficult to accept, and I can understand your annoyance, but I'm afraid that's the position.

Don’t align with your view

100 users x 0.25% AMC increase.
let’s use 200k average pot, and an average 10 years to go

So £500 per pot per annum, or £5000 per person over 10 years.

Nice little additional 1/2 million in fees for Aviva

Slider

jamesd said:

As a member, your primary source of information about which applies is the pension provider and you can expect that they will provide accurate information.


You checked in writing and verbally and were told that yours was of the more modern type that would not be affected by changes.

Complain in writing and ask them to put you in the position that you would be in if they had not misinformed you by

It appears that they may have tried to address the issue by moving you all to individual plans so that you'd all be on new and higher charges,

Complaint has been formally raised. 

Re moving to individual plans. It was the supporting paperwork for these new plans that explicitly stated that AMC charges would remain the same.

There is no comment regarding additional deposits or transfers being treated to different AMC rates, and as stated before, I called to confirm this specific issue. Finally, the fund information in my plan (viewed online) still states the original AMC rates.

so to summarise

They have written to confirm AMC doesn’t change
They confirmed on telephone that is wouldn’t change
They still publish in the member site the AMC rates as used since scheme started.

jamesd

Marcon said:

OP has suffered no actual financial loss; 

The OP has not been receiving the extra units each month that are normally used to deliver discounts. That's an ongoing financial loss.

TVAS

Complain to the Pensions Ombudsman after initially complaining to the new provider. The AMC hike is daylight robbery.