Aegon and Cofunds have reduced platform charges in the wake of the Budget, with Aegon becoming the first advised platform to introduce a cap on charges.
Charges on Aegon’s One Retirement platform will be capped at £750 annually while charges on the Aegon Retirement Choices investment platform will be capped at £1,215 annually.
There will be no charges on assets over £250,000 for both platforms. The changes come into effect on 3 May.
Aegon says around 10 per cent of existing clients will see charges capped as a result and expects that proportion to grow.
Its basis point charge on the One Retirement platform falls to 0.3 per cent for assets under £250,000. The current charge is 0.4 per cent on assets up to £100,000 and 0.35 per cent on assets between £100,000 and £250,000.
For the ARC platform, the first £29,999 will be charged 0.6 per cent, falling to 0.55 per cent for assets between £30,000 and £49,999, then to 0.5 per cent for assets between £50,000 and £99,999, then 0.45 per cent for assets between £100,000 and £249,999.
Aegon says it expects to introduce a fixed fee charge for new clients in 2015.
Following the pension reforms announced in the Budget, Aegon is also reducing its minimum investment amount for drawdown from £50,000 to £20,000.
Aegon investment director Nick Dixon says: “The budget is a game changer. It is a catalyst for saving and pensions saving in particular. We wanted to reduce charges and improve access with smaller minimum investment amounts.”
Cofunds has reduced its pension drawdown charges on the platform, including removing its pension account annual admin charge.
The charge was £150 for assets up to £100,000, tiered down to no charge on assets over £200,000.
The drawdown set-up fee has red-uced from £120 to £100 while its annual drawdown charge has drop-ped from £150 to £120.
It will now charge £100, down from £150, to review clients’ income limits under capped drawdown.
The charge for switching out of capped drawdown and into flexible drawdown has also been reduced from £150 to £100.
All prices exclude VAT.
Cofunds chief executive David Hobbs says: “We have long believed that pensions should be at the heart of the overall platform proposition as part of a range of fund and wrapper solutions – not an add-on.
“We feel this is the right move to make, particularly in light of the Chancellor’s latest reforms affecting the retirement market.”
Axa Wealth has cut charges on its Elevate platform on assets over £1m. The platform previously char-ged 0.28 per cent on assets over £500,000.
It now has three pricing tiers, with assets over £1m charged 0.25 per cent, assets over £2.5m charged 0.15 per cent and assets over £5m charged 0.1 per cent. Charges apply on the whole portfolio
Pricing on assets below £500,000 remains unchanged. Elevate charges 0.4 per cent on assets up to £24,999, 0.34 per cent on assets up to £99,999 and 0.32 per cent on assets up to £499,999.
EXPERT VIEW
Holly Mackay
With Cofunds announcing changes to its Sipp charges and Aegon introducing a cap on charges, we see a return to a focus on cost in the adviser platform market.
While the announcements specifically relate to opposite ends of the market, together they hint at a new front in the platform price war when it comes to pensions, following the Budget.
Aegon’s cap on charges is the first cap we have seen in the adviser platform market and we welcome this as positive for customers.
We watched as the direct platforms competed in a rather lukewarm price war, with some playing fixed fee and/or capped fee cards. Aegon has now thrown down a capped price gauntlet and we expect ensuing debate to be more about the pricing ‘how’ than the pricing ‘how much’.
We have also seen Cofunds make some important changes to its pricing structure.
Cofunds has a relatively low average account size and few assets are held within a Sipp wrapper (just 4.8 per cent of the total AUA). However the flat fees charged previously on Sipps made it expensive for pension investors with small pots but increasingly competitive as assets increase. The removal of the pension charge has gone a long way to removing this inconsistency.
There is now a broad choice of platforms which will administer Sipp assets for 40bps or less (for smaller accounts) and 30bps or less (for larger accounts). Advisers, and ultimately customers, paying more need to be clear on the reasons for this.
Holly Mackay is managing director of The Platforum
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