Extra commission for placing pension annuities seems to be on the cards for major independent financial adviser, Origen Financial Services Ltd. Partnership Assurance and Legal & General are set to pay them commission of 5% and 2.5% respectively under a new annuity outsourcing deal which the firms are launching next month, according to a report from Money Marketing. It was revealed earlier this month that Origen had agreed to pass corporate annuity customers with pension funds worth less than £50,000 to Legal & General and Partnership.
Directly Financial’s Stuart Bayliss says the commission rates are about 70% above the norm that is payable to specialist advisers providing whole of market solutions. Specialist retirement advisers get about 1.5% commission on conventional annuities while general IFAs get 1%. For enhanced annuities, retirement specialists get up to 3%, and others get 1.5%. Under the new deal, Origen will search the open market if asked by a client but those who do not request proper advice will be channelled to either L&G or Partnership.
Bayliss has said that annuities are a pooled product, and that commission levels of this size are bound to penalise clients and that his clients will be among those who will pay for Origen’s higher commission. An Origen spokesman said that the commercial agreements for this new arrangement have not yet been finalised but whatever level of commission is agreed will not have an impact on the market annuity rate, adding that Origen does get preferential commission rates because of the larger volumes of business they place along with greater member communication, and better processing and administration than is undertaken by certain other specialist smaller annuity IFAs.
