Norwich Union has unveiled a new personal pension designed to support the full financial advice process.
The new pension product will be available from 13 December 2004 and will give customers the choice as to whether they pay for their financial advice through fees, commission or a combination of both.
The new “non-stakeholder” product will give customers access to a wide range of investment funds with 29 Norwich Union funds including six socially responsible investment (SRI) funds and three fund of funds as well as 34 external funds from eight fund managers.
The new pension product will have the following charges:
Up to 1% annual fund charge. An additional annual charge ranging from 0.1% to 0.9% will apply to external funds and funds of funds*. A large fund discount applies to investments of: ?10,000+ (0.10% reduction), ?30,000+ (0.15% reduction) and ?50,000+ (0.20% reduction). On regular payments, a charge of 10% on the first five years’ payments, or a charge of 20% on the first two years’ payments. There is no initial charge on lump-sum investments.
With this new pension, customers now have the choice of paying a fee to their adviser rather than paying for the advice they receive through commission paid to the adviser on the product sale. Customers who choose this option will see a reduced annual fund charge for both regular payments and lump sum investments.
This new pension and its charging structure is entirely consistent with the forthcoming “menu” approach, which will allow customers to clearly see the cost of advice in a transparent way. Additionally, IFAs will have the option of advice being paid for by fee.
The new charging structure for commission-based advice equates to reduction in yields for Norwich Union selected funds that are broadly comparable with the new charging structure for stakeholder pensions, which become effective in April 2005.