Consumer duty and workplace pension

cockerWalker

Hi,
Has anyone any experience or knowledge of complaining about pension scheme fees and terms and conditions under the new (2yo) consumer duties? I've seen multiple cases upheld about poor administration, but not around t&cs / fees.

My situation is that I have a fairly old Aviva workplace pension with a limited choice of funds and 0.75% annual management fee as well as fund charges. In my view this is inferior in every way that matters to a normal Aviva sipp, which would cost .35% and have more options.
I would just regularly transfer out to a different pension (have done so a couple of times), but Aviva are saying that I won't be able to do this much more due to only having a small number if segments left (an artificial problem of their own making in my view).

I can't close my workplace pension without losing my employer contributions and salary sacrifice.

Any relevant thoughts or experiences?

eskbanker

I'm not aware of the consumer duty obliging firms to reduce costs or improve fund choices, but if the structure of the product hinders transfers that might be a more productive angle.  However, have you raised the subject with your employer?

DRS1

As @eskbanker says, talk to your employer and suggest they get a better (cheaper) workplace pension scheme.

What does this consumer duty thing actually say?  Who does it apply to?  What makes you think you have the relevant relationship with Aviva to enable you to complain about anything in respect of the pension scheme?

dunstonh

Has anyone any experience or knowledge of complaining about pension scheme fees and terms and conditions under the new (2yo) consumer duties?

To be honest, I cannot see how pension charges on workplace pensions could fall foul of the consumer duty.    The cap for default funds is 0.75% which would be an appropriate benchmark.

My situation is that I have a fairly old Aviva workplace pension with a limited choice of funds and 0.75% annual management fee as well as fund charges.

 I suspect you are mistaken.  The cap is 0.75% all in.  Its not 0.75% plus fund charges.

 In my view this is inferior in every way that matters to a normal Aviva sipp, which would cost .35% and have more options.

The Aviva SIPP has lower admin costs as it doesn't have to work with payroll systems.   However, you seem to be disregarding the fund charges on the SIPP whereas the workplace pension includes both.

Any relevant thoughts or experiences?

Seeing as you are likely incorrect about charges and seeing as Aviva will be within compliance of the rules and supplying the contract that your employer has chosen I cannot see what you have to complain about.  Certainly not using the Consumer Duty anyway.

cockerWalker

dunstonh said:

Has anyone any experience or knowledge of complaining about pension scheme fees and terms and conditions under the new (2yo) consumer duties?

To be honest, I cannot see how pension charges on workplace pensions could fall foul of the consumer duty.    The cap for default funds is 0.75% which would be an appropriate benchmark.

My situation is that I have a fairly old Aviva workplace pension with a limited choice of funds and 0.75% annual management fee as well as fund charges.

 I suspect you are mistaken.  The cap is 0.75% all in.  Its not 0.75% plus fund charges.

 In my view this is inferior in every way that matters to a normal Aviva sipp, which would cost .35% and have more options.

The Aviva SIPP has lower admin costs as it doesn't have to work with payroll systems.   However, you seem to be disregarding the fund charges on the SIPP whereas the workplace pension includes both.

Any relevant thoughts or experiences?

Seeing as you are likely incorrect about charges and seeing as Aviva will be within compliance of the rules and supplying the contract that your employer has chosen I cannot see what you have to complain about.  Certainly not using the Consumer Duty anyway.

No, there are additional fund charges listed, both on fund factsheets and in my annual statement.

The reason for looking to consumer duty regulations (from Aviva's own site) at https://connect.avivab2b.co.uk/adviser/consumer-duty/:
"

• Products & services: to evidence that the design of all products and services continue to meet the needs, characteristics and objectives of their target market
• Price & value: to evidence that that all products and services give fair value"

My argument would be that I'm not receiving fair value, even in comparison to their own offerings they are selling now, and that their offering is failing to meet needs and objectives by limiting transfers.

I am also speaking to employer, but wheels are grinding exceedingly slowly.

Marcon

cockerWalker said:

Hi,
Has anyone any experience or knowledge of complaining about pension scheme fees and terms and conditions under the new (2yo) consumer duties? I've seen multiple cases upheld about poor administration, but not around t&cs / fees.

My situation is that I have a fairly old Aviva workplace pension with a limited choice of funds and 0.75% annual management fee as well as fund charges. In my view this is inferior in every way that matters to a normal Aviva sipp, which would cost .35% and have more options.
I would just regularly transfer out to a different pension (have done so a couple of times), but Aviva are saying that I won't be able to do this much more due to only having a small number if segments left (an artificial problem of their own making in my view).

I can't close my workplace pension without losing my employer contributions and salary sacrifice.

Any relevant thoughts or experiences?

How old is 'fairly old' - and when did your employer become subject to auto enrolment duties?

cockerWalker

I've been a member for 15 years. Scheme is older than that. Auto enrollment was 2012? I was a member before it came in. 

dunstonh

No, there are additional fund charges listed, both on fund factsheets and in my annual statement.

Could you provide some examples, as you are accusing Aviva is breaching the rules.  I suspect they are not, and you are misreading it.  For example, fund factsheets traditionally show the default charge and are not personalised to show discounted charges.

The provider and fund AMC combined should not exceed 0.75% on the default funds.
The transaction charges figure is not included in that, as it is a synthetic charge and was introduced by the EU after auto-enrolment rules were set.   No-one takes any notice of the transaction charges figure 

The reason for looking to consumer duty regulations (from Aviva's own site) at https://connect.avivab2b.co.uk/adviser/consumer-duty/:
"

• Products & services: to evidence that the design of all products and services continue to meet the needs, characteristics and objectives of their target market

• Price & value: to evidence that that all products and services give fair value"

Both points are met with all of Aviva's auto-enrolment compliant pensions.

My argument would be that I'm not receiving fair value, even in comparison to their own offerings they are selling now, and that their offering is failing to meet needs and objectives by limiting transfers.

That is down to your employer.    Aviva prices their products based on the size of the group scheme and how much the employer negotiates terms.    Larger employers can get better terms than smaller ones.    However, as long as the defaults are within 0.75% then they are meeting the requirements.

Marcon

cockerWalker said:

I've been a member for 15 years. Scheme is older than that. Auto enrollment was 2012? I was a member before it came in. 

Auto enrolment started in 2012 for the largest employers, but that doesn't mean your employer was one of these - hence my question about when they became subject to auto-enrolment duties (although as you were already in a pension scheme, that may well have passed you by!).

I wonder if the scheme is actually compliant with auto-enrolment requirements? You might ask the employer to confirm. https://www.thepensionsregulator.gov.uk/-/media/thepensionsregulator/images/ae-detailed-guidance/detailed-guidance-4--appendix-b-steps-to-take-to-determine-if-your-dc-pension-scheme---personal.ashx

cockerWalker

I'm not using the scheme default fund (it was a significant chunk of bonds when i was 30 years out from retirement). 
The main bit is the barriers to transferring, as a could only do 2 more 90% transfers without closing it, and I do resent paying more for a pension with £50k than £250k and find it difficult to see that as fair when I could get significantly better from aviva themselves.

Marcon

cockerWalker said:

I'm not using the scheme default fund (it was a significant chunk of bonds when i was 30 years out from retirement). 
The main bit is the barriers to transferring, as a could only do 2 more 90% transfers without closing it, and I do resent paying more for a pension with £50k than £250k and find it difficult to see that as fair when I could get significantly better from aviva themselves.

The scheme has to offer a default fund. Whether you're using it isn't a relevant consideration - there are plenty of other conditions, as you'll see from the link I gave.

If by transferring out the whole lot you are deemed to have opted out, would your employer re-enrol you immediately if you ask them to do so - and into what sort of scheme: the one you are in now?