16 March 2016

Commission switch off for Workplace Pension Schemes

In March 2014 the Government announced its intention to introduce a range of measures to protect members automatically enrolled into a workplace pension scheme. This included a ban on commission for all qualifying automatic enrolment (AE) schemes.

From April 2016 all paid commission to advisers for these schemes must stop

Here we summarise our position.

AE qualifying schemes from April 2016 post staging date

Cut-off date and member charges

From 31 March 2016 all commission payable for Legal & General schemes will cease and member Annual Management Charges (AMC) will be adjusted appropriately 1 April 2016.

For any commission to be generated, all contribution and transfer processes must have been fully completed on or before 31 March 2016.

The member AMC will be dependent on the commission basis established for that scheme. We'll advise you separately on a scheme specific basis what the new charges will be.

Commission claw back

  • All types of commission payments will cease immediately on our systems from switch off.
  • No further commission or claw back will be generated post 31 March 2016 for future scheme contribution changes.
  • No back dating of contributions will be allowed post 31 March 2016.

Commission crystallisation

  • The commission position for each AE Qualifying Scheme (past Staging Date) will be determined on 31 March 2016 - the point at which we turn off the relevant commission components.
  • If the net commission position means that a further payment is due, we will pay the balancing amount.
  • If the net commission position means you have received more than you are due, you will be required to pay back any overpayment to us.

Further information about this and details around the expected timing of balancing payment/recovery activity will be communicated shortly.

Products affected

  • Group Stakeholder
  • Group Personal Pension 2000 (GPP 2000)
  • WorkSave Pension Plan 1
  • WorkSave Pension Trust 2
  • WorkSave Pension Trust (RAS) 3

Annual Management Charge (AMC)

For our member AMC we will compare the commission-free AMC to our default Product AMC as shown below. Schemes will be subject to the lower of these figures for all categories of membership.

Annual Management Charge

Scheme / Fund Type Default AMC (NIL Commission)
WorkSave Products
(Generation 3 funds)
0.37%*
WorkSave Products
(Generation 25 funds)
0.27%*
Group Stakeholder &
GPP 2000
0.50%**

* a separate Fund Management Charge will apply to these products.
** a separate Fund Management Charge will apply where non Legal & General funds are used

Our default AMCs are designed to ensure, where members are invested in our current default option for WorkSave products of the Multi-Asset fund, the total charge would be 0.50% in line with our AE charge pledge.

Fund Management Charge

For all our WorkSave products (as listed 1, 2, 3), a separate Fund Management Charge is payable. Any scheme breaching the 0.75% Charge Cap after the AMC reduction will need to select a default fund that brings them under the cap.

Non AE qualifying schemes from April 2016

A separate review for Non AE qualifying schemes will be carried out later in 2016. We will contact you again once our position has been finalised.

In the meantime, we will continue to maintain commission payments until our review has taken place.

Member charges will remain at their current levels.

Where schemes subsequently stage between 6 April 2016 and our review, the AE principles listed above will apply.

If you have any further questions, please speak to your usual Legal & General representative.