Title
Contents
Acknowledgements 7
The Authors 8
Abbreviations 9
Glossary 10
Summary 20
1. Introduction 25
1.1 Policy background: the Pensions Act 2008 25
1.1.1 Automatic enrolment 26
1.1.2 Minimum employer contribution 26
1.1.3 The personal accounts scheme 26
1.1.4 Qualifying workplace pension schemes 27
1.2 Research objectives 27
1.3 Market background: workplace pensions 27
1.3.1 The workplace pensions market 28
1.3.2 The workplace pensions industry 29
1.4 Project methodology 30
1.4.1 Participants' perceptions 30
1.4.2 Identifying providers and intermediaries 31
1.4.3 Telephone screening and identifying the appropriate respondent 32
1.4.4 In-depth interviewing 33
1.4.5 Analysis and reporting 34
2. The workplace pension market in 2008 35
2.1 Pension products available: the shift from occupational schemes to workplace personal pensions 35
2.1.1 Mass market pension provision 35
2.1.2 Director and senior manager pension provision 36
2.2 Comparison of WPP charging structures 37
2.3 The impact of the group stakeholder charging cap upon GPP and SHP charges 37
3. Charges applied to group personal pensions and group stakeholder pensions 39
3.1 The range of annual management charges applied to schemes 39
3.2 Factors providers considered when setting the annual management charge 41
3.2.1 Expected contributions (employer or employee) per member 42
3.2.2 Proportion of the eligible workforce expected to become members 42
3.2.3 Staff turnover 42
3.2.4 Level of effort required from the provider in setting up and maintaining a scheme 43
3.2.5 Size of the employer 43
3.2.6 Age profile of the employees 43
3.2.7 Industrial sector and geography of the employer 44
3.2.8 Value of business provided by the intermediary 44
3.2.9 Transfers in from other schemes 44
3.3 How intermediary commission impacted upon the AMC 44
3.4 Variations to the single, flat-rate annual management charge 46
3.4.1 Active member discounts 46
Proponents of active member discounts 47
Reluctant adopters of active member discounts 47
Those with no plans to adopt active member discounts 48
3.4.2 Giving members with larger funds a lower AMC 48
3.4.3 Variation of AMC over time 48
3.4.4 Fees charged to employers 49
3.4.5 The dual AMC 49
4. Fund selection and fund management charges for group personal pensions and group stakeholder pensions 50
4.1 Funds typically offered to members 50
4.2 The use of default funds by members 51
4.3 Make-up of the default fund 52
4.4 Fund management charges 53
4.4.1 Funds managed by an in-house fund manager 53
4.4.2 Funds managed by an external fund manager 54
4.5 Charges for switching investments between funds 54
4.6 Charges for transfers in or out of schemes 54
5. Group self-invested personal pension charges 56
5.1 The market for group SIPPs 56
5.2 Examples of the structure and range of charges in group SIPP products 57
6. Cross-selling 59
6.1 Intermediary cross-selling 59
6.2 Provider cross-selling 60
6.3 Concluding summary 60
Appendix A: Introductory letters 62
A.1 Introductory letter for providers 63
A.2 Introductory letter for intermediaries 67
Appendix B: Fact sheet sent to all participants with introductory letter 71
Background information on the Government�s proposals forpension reform 71
Appendix C: Discussion guide for providers 73
INTRODUCTION 74
SECTION 1: RANGE OF WORKPLACE PENSION SCHEMES OFFERED 74
SECTION 2: GPP/SHP CHARGES WHERE SINGLE-PRICE MODEL APPLIES 76
SECTION 2B: GPP CHARGES WHERE SPLIT CHARGE MODEL APPLIES ONLY 78
SECTION 3: FUND MANAGEMENT CHARGES (ALL RESPONDENTS) 79
SECTION 4: GROUP SIPP SPECIFIC CHARGES 80
SHOW SHOWCARD 3 80
SECTION 5: COMMISSION PAYMENTS (ALL RESPONDENTS) 81
SECTION 6: OTHER ISSUES 82
Appendix D: Discussion guide for intermediaries 83
INTRODUCTION 84
SECTION 1: RANGE OF WORKPLACE PENSION SCHEMES OFFERED 84
SECTION 2: GPP/SHP CHARGES WHERE SINGLE-PRICE MODEL APPLIES 87
SECTION 2B: GPP CHARGES WHERE SPLIT CHARGE MODEL APPLIES ONLY 88
SECTION 3: FUND MANAGEMENT CHARGES (ALL RESPONDENTS) 90
SECTION 4: GROUP SIPP SPECIFIC CHARGES 90
SECTION 5: COMMISSION PAYMENTS (ALL RESPONDENTS) 91
SECTION 6: OTHER ISSUES 92
Appendix E: Information about the workplace pension reforms given to participants during the interview 93
Proposals for pensions reform 93
Table 1.1 Profile of organisations interviewed 32
Table 3.1 Typical AMCs that the providers in this study levied on members of GPPs and SHPs 41
Table 4.1 Number of funds commonly offered by providers of GPPs and SHPs 51
Table 5.1 Examples of group SIPP charges, based on information from three providers and four large intermediaries 58
Figure 1.1 The types of pension commonly available in the workplace pensions market in 2008 28