Half of pension product providers will have to reduce their product charges as a result of RDR, a survey by retirement solutions specialist Dunstan Thomas has found, while 76 per cent of fund managers and 74 per cent of retail investment product providers believed their product charges would also have to be reduced.

In its survey of 34 pension product providers and funds supermarkets, conducted last month, over a third thought retirement product providers will see margins squeezed as compliance costs rise. The same number signaled that retirement-focused IFAs will suffer a temporary loss of income as they adjust to new ways of charging for the advice they give.

In terms of the speed and likely impact of these price reductions, 41 per cent said pension providers would be forced to close many legacy books of business to top-ups and increments as they become uneconomical to operate post RDR.

Commenting on these findings, Dunstan Thomas chief executive Chris Read said: “From an industry perspective, they should not be rubbing their hands with glee when they see product providers reducing their charges, as it’s within those charges that they can build the products and services and provide value back to clients as well.”

The survey also found the introduction of new pricing mechanisms for advised transactions was the hardest change to make in time for the RDR deadline, according to nearly a third of providers questioned.

The most expensive change being implemented by providers in 2012 is the provision of ‘disclosure of effective deductions on illustrations’, according to 38 per cent; while just over one in five providers said that auto-enrolment preparations were requiring the most costly system changes this year.

The same percentage (21 per cent) said that elimination of commissions and cash rebates and replacing these with adviser charging is proving most expensive reform to implement ahead of the RDR deadline.

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