Title
Contents
Acknowledgements 8
The Authors 9
Abbreviations 10
Glossary 11
Summary 21
1. Introduction 25
1.1 Research objectives 26
Part A. Trust-based schemes 28
2. Trust-based occupational pension scheme survey introduction 29
2.1 Project methodology - trust-based occupational schemes 29
2.2 Sample source and design - trust-based occupational schemes 30
2.3 Interviewing and response rate - trust-based occupational schemes 30
2.4 Varying charge structures in trust-based occupational pension schemes 31
2.5 Analysis and reporting 32
2.6 Table conventions 32
3. Trust-based occupational scheme profile 33
3.1 Profile of occupational pension scheme managers 33
3.2 Scheme sizes and scheme age 35
3.3 State Second Pension and multi compared to single employer schemes 37
3.4 Size of employer and employee contributions 38
4. Overall charges in occupational pension schemes 41
4.1 Frequency of overall charges, who pays it and how it is charged 42
4.2 Size and frequency of overall charge 44
4.3 Overall charges and intermediaries 49
5. Charge levels for specific elements of occupational pension schemes 52
5.1 How are scheme charges broken down and who pays them? 53
5.2 Who pays charges in schemes with separate specified elements? 54
5.3 New member fees 54
5.4 Core fund management/investment charges 54
5.5 Core administration charges 56
6. Additional charges for fund management 58
6.1 Charges for specific fund choices by members 59
6.2 Charges for fund switching 61
6.3 Charges for transferring out 63
6.4 Charges for refunds of pension contributions (e.g. for leaving a scheme early) 64
6.5 Transferring to an alternatively secured pension or prior to buying an annuity 65
6.6 Charges for dealing with pensions and divorce 65
6.7 Other pension charges 66
7. Charge variations 68
7.1 Active member discount 68
7.2 Reduced rates for larger funds 68
7.3 Front-loaded charges 69
7.4 Variation in charges over a schemes lifetime 69
8. Size of funds under management 70
8.1 Estimated total value of funds 70
8.2 Average gross pay of scheme members 72
Part B. Workplace personal pensions 74
9. Contract-based workplace personal pensions survey introduction 75
9.1 Introduction 75
9.2 Project methodology 75
9.3 Information requested from providers 77
10. Workplace personal pension charges 78
10.1 Distribution of standard basic AMC levels - overall 78
10.2 Distribution of standard basic AMC levels - by scheme size 80
10.3 Distribution of standard basic AMC levels - excluding intermediary commission elements 81
10.4 Distribution of standard basic AMC levels excluding intermediary commission elements by scheme size 82
10.5 Ad hoc charges and charge variations on GPPs/SHPs 83
Appendix A. Occupational pension scheme - response rate calculation details 86
Appendix B. Occupational pension schemes survey - weighting 90
Appendix C. Occupational pension scheme survey - introductory letter 93
Appendix D. Occupational pension scheme survey - questionnaire 96
Appendix E. WPPs survey - questionnaire 123
Table 2.1 Occupational scheme sample sizes by scheme size 30
Table 3.1 Employer of pension scheme trustees, by scheme size 35
Table 3.2 Number of deferred compared to active members 36
Table 3.3 Estimated size of employee contribution as percentage of gross pay 40
Table 4.1 Extent of overall charges, by scheme size 42
Table 4.2 Comparison of mean percentage overall charges based on funds, depending on whether the charge covers intermediary commission payments or not 51
Table 6.1 Fund switching charges - likelihood by scheme size and mean number of switches 61
Table 7.1 Frequency of front loaded charges for members 69
Table 8.1 Value of funds under management by number of members 72
Table 8.2 Average gross pay of active members, by scheme size 73
Table 10.1 Breakdown of standard basic AMC within the one per cent plus category 81
Figure 3.1 Occupational scheme manager job functions 34
Figure 3.2 Numbers of active compared to deferred members 36
Figure 3.3 Age of schemes 37
Figure 3.4 Employer contribution levels 38
Figure 3.5 Employee contribution levels 39
Figure 4.1 Payment of scheme charges by employer compared to employee 43
Figure 4.2 How overall charges are levied 44
Figure 4.3 Frequency of overall charge 45
Figure 4.4 Variation in overall charge levels for percentage charges based on fund size 46
Figure 4.5 Variation in overall charge levels for percentage charges based on fund size 47
Figure 4.6 Variation in overall charge levels for percentage charges based on contribution 48
Figure 4.7 Variation in overall charge levels for percentage charges based on contribution 49
Figure 4.8 Level of payment to intermediaries from overall charges 50
Figure 5.1 Main ways in which pension charges are broken down 53
Figure 5.2 How are core fund management/investment charges levied? 54
Figure 5.3 Frequency of core fund management/investment charges 55
Figure 5.4 Size of core fund management percentage charges 56
Figure 5.5 How core administration charges are levied 57
Figure 5.6 Size of core administration flat fees 57
Figure 6.1 Type of fund choices by members leading to additional charges 59
Figure 6.2 Size of specific fund choice percentage charges 60
Figure 6.3 Number of free switches allowed before charges are made 62
Figure 6.4 Size of flat fee for fund switching 62
Figure 6.5 How transferring out charges are levied 63
Figure 6.6 Size of percentage charge for transferring out 64
Figure 6.7 How annuity/ASP fund transfer charges are levied 65
Figure 6.8 Size of divorce related pension flat fee charges 66
Figure 6.9 Incidence of other types of service charges 67
Figure 8.1 Size of scheme funds 71
Figure 8.2 Average gross pay of active members 73
Figure 10.1 Distribution of standard AMC for GPPs/SHPs (Q1a) - total across all schemes 79
Figure 10.2 Distribution of standard AMC for GPPs/SHPs (Q1a) - by number of scheme members 80
Figure 10.3 Standard basic AMC for GPPs/SHPs excluding intermediary commission (Q1b) - total across all schemes 82
Figure 10.4 Standard basic AMC for GPPs/SHPs excluding intermediary commission (Q1b) - by number of scheme members 83
Figure 10.5 Charge variations/ad hoc charges on GPPs/SHPs 84
Figure 10.6 Active member discount on GPPs/SHPs (Q2) 85