Related provisions for COBS 19.6.2
1 - 1 of 1 items.
A firm, for a default arrangement within a qualifying scheme, may only make, impose or otherwise facilitate payment of an administration charge1 by way of an accrued rights charge or a combination charge structure where:(1) the limits in COBS 19.6.6 R are not exceeded; or(2) the firm has obtained appropriate express agreement to exceed the limits and the following conditions are satisfied:(a) the express agreement contains an acknowledgement by the member that the administration
The effect of COBS 19.6.4R (2)(c) is that a firm may not seek express agreement from a member to charges in excess of the limits for services which are obligatory under law, or form part of the core operation of the scheme. Such core services include, for example, designing and implementing an investment strategy, investing contributions to the scheme (to the extent that this would incur administration charges1), holding investments relating to scheme members and transferring
The limits on administration charges are as follows: (1) for a qualifying scheme which uses only an accrued rights charge, 0.75% of the value of those accrued rights; (2) for a qualifying scheme which uses a combination charge scheme:(a) for the flat-fee charge element, £25 annually;(b) for the contribution percentage charge element, 2.5% of the contributions annually; (c) for the associated accrued rights charge, the limits as set out in column 2 of the table in COBS 19.6.7
This is the table referred to in COBS 19.6.6 R.
Contribution percentage charge rate (%) |
Accrued rights charge rate (%) |
1 or lower |
0.6 |
Higher than 1 but no higher than 2 |
0.5 |
Higher than 2 but no higher than 2.5 |
0.4 |
Flat-fee charge (£) |
Accrued rights charge rate (%) |
10 or less |
0.6 |
More than 10 but no more than 20 |
0.5 |
More than 20 but no more than 25 |
0.4 |
(1) To ensure that administration charges1 are within the limits set out in COBS 19.6.6 R:(a) a firm should calculate the value of accrued rights in an accrued rights charge as the arithmetic mean over a 12-month period of membership of the qualifying scheme, using at least four evenly-distributed reference points over that period;(b) a firm should calculate the value of contributions in a contribution percentage charge over a 12-month period of membership of the qualifying scheme
(1) A firm must not make or otherwise facilitate any payment to a third party for advice or services provided pursuant to any agreement made between that third party and an employer for whom the firm is operating a qualifying scheme, including consultancy charges, which would have the effect of reducing the value of the accrued rights of a member of that qualifying scheme to whom this section applies.(2) The restriction in (1) does not apply where the firm has obtained express