Principles-based charging should be attached to non-adviser group personal pensions (GPP) business, and adviser charging to individual advice on GPP, says Friends Provident.

The corporate pensions specialist has called for the Financial Services Authority (FSA) to clarify proposals in its written feedback statement on corporate pensions as part of the Retail Distribution Review (RDR), and believes these regulations should take into account the full impact of 2012's implementation of Personal Accounts and automatic enrolment.

'Member fees' are, according to Friends Provident, the most effective way of meeting the cost of advice.

"The fundamental problem of applying adviser charging to corporate pensions is matching the overall adviser related scheme set up costs to members in as fair a way as possible," said Martin Palmer, head of corporate pensions marketing at Friends Provident. "If implemented correctly, either the employer or the member should be able to pay the member fee; for example, the employer may wish to meet the cost of setting up the scheme with the member paying all ongoing charges."

Palmer added that flexible charging options should also be considered for these members. "We recommend the member fee could be a fixed amount or a proportion of the contribution amount and/or the value of the fund, which we believe will make the process smoother."

- Pensions Age August 2009

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