Royal London, a UK mutual life, pensions and investment company, is to introduce a scheme that will allow its unit-linked pension and drawdown customers to share financially in its success.
Known as ProfitShare, the model means from January next year, in addition to the existing with profits allocations, a new ProfitShare amount will be awarded to any new customers buying a unit-linked pension plan and to existing unit-linked customers who have set-up a unit-linked pension plan since 1 July 2001. This will include all those customers who have been automatically enrolled into a workplace pension.
Royal London believes that that 600,000 existing pension customers will immediately benefit while almost 400,000 new pensions customers will be eligible to participate in the ProfitShare arrangements over the next five years.
Royal London has set up an independent expert to ensure that the way ProfitShare works is fair for all those who qualify both new and existing customers.
Royal London CEO Phil Loney said: "As a mutual company we want to ensure that our customers and members have the best outcomes and experience, and we wanted to find a way for those members of Royal London who don’t invest in our With Profits fund to also share in the profits of our business.
"Our innovative approach will significantly increase the number of Royal London customers who will see their savings increase through sharing in our profits and will further enhance our already strong competitive position in the pension and drawdown markets."
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Royal London said it has informed the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) about the initiative and they have no objections to its approach.