Charge cap - Commission ban – from 6 April 2016

19 February 2016
From 6 April 2016 we will no longer support commission or Financial Adviser's Fee for our auto enrolment workplace personal pension schemes.

This change will apply to both new and existing members of these schemes.

We're writing to advisers with existing commission payments during week commencing 7 March 2016 with details of the scheme(s) affected to remind them of this change and the impact on their remuneration.

When do the changes apply?

Effective dateScheme type
6 April 2016

(or employer's staging date if later)
All auto enrolment / qualifying personal pension schemes  (i.e. GPPs and Group Stakeholder Pensions)
6 April 2016

(or employer's staging date if later)
New occupational auto enrolment / qualifying pension schemes that provide money purchase benefit (including AVCs)
To be confirmed by the Government 1 Existing occupational auto enrolment / qualifying pension schemes that provide money purchase benefit (including AVCs)

1 The commission ban will not apply to the commission for existing occupational auto enrolment / qualifying pension schemes from 6 April 2016. The Government has announced that it will be consulting on the regulations for existing commission on these schemes later in 2016.

In the meantime we'll continue to honour the current commission payments for existing occupational schemes until the effective date and we'll be in touch again once we know when this will be.

When the changes don't apply

Available material

We've developed two calculators that will help you value your service.

Our charge cap and commission stance

Government response and consultation on draft regulations on banning member-borne commission in occupation pension schemes.

Adviser charges update

Retirement Solutions Remuneration Guide

The commission ban does not affect:

  • workplace pension schemes that were paid up prior to the employer's staging date.
  • workplace pension schemes that have passed their staging date, but are not being used to meet the employer's auto enrolment duties.
  • individual personal pensions.

Key dates

The date that determines whether we can make a commission payment to an adviser is the date we receive a contribution. This means we cannot make any commission payments to advisers for any contributions we receive after Tuesday 5 April 2016.

Regular contributions - If regular contributions are paid in arrears, this may mean that the last contribution generating commission will be the February contributions.

Single / transfer payments - We can't make a commission payment to you for any single contributions / transfer values we receive after 5 April 2016 – even if they were agreed before 5 April 2016.

Backdating contributions / instructions - We will not be able to backdate contributions or retrospectively change commission instructions.

Our stance on commission

Following the introduction of the Government's charge cap legislation in April 2015, we've continued to support commission payments to advisers until the last possible date allowed by the legislation.

Royal London shouldered this cost, even though we've already removed or reduced any charges relating to commission payments from auto enrolment and qualifying schemes.

We'll also take this approach with commission payments for existing auto enrolment / qualifying occupational schemes and will confirm when existing commission payments for these schemes will be banned once the Government confirms the effective date.

Our existing commission clawback rules will continue to apply, with no change. See the Retirement Solutions Remuneration Guide for details.

What do you need to do?

  1. For commission based (pre-RDR) schemes, please make sure we receive contributions/transfer payments by 5 April 2016, otherwise you won't receive the commission.
  2. You'll need to consider agreeing a fee with the employer to cover any outstanding or ongoing commission due to you, to ensure that you're paid in full for your services. We've developed two calculators that will help you value your service and attract and retain profitable corporate clients.
  3. If you produce your own illustrations on our online service before 6 April 2016 then you should be aware that commission will still show as an option, regardless of whether the effective date of the illustration is after 5 April 2016. Illustrations you create from 6 April 2016 onwards will not have commission available as an option.
Last updated: 11 Mar 2016

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London EC3V 0RL.