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Oh, what a feeling! Aegon dances on the ceiling.

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Another day, another price movement. Fresh on the back of the Cofunds SIPP update yesterday, the Dutch massive have entered the fray, announcing revised charging structures on both the ARC platform and One Retirement pension product.

From 3 May there is a now a price ceiling at £250k in both cases. We think this is hoooge news and potentially game changing stuff. More on this later.

In a clear response to that budget, a raft of changes to the One Retirement proposition are also kicking in. Namely, a rationalised investment range of around 100 funds (details to be confirmed later this month) and a lowering of the drawdown access limit from £50k to £20k.

And tucked away in the copy of the press release is a statement that we interpret as … a stated intention to move to a fixed charge model in 2015. If we are right, again, hoooge.

The new pricing structures

Phew. A lot to take in then. Let’s look at the new pricing structures first:

 

The clear headline here (other than One Retirement now being much cheaper than ARC) is the extraordinarily positive move to put a pricing cap on assets under management, in this case on funds above a quarter of a million in each product. Clearly learning from the many D2C providers who have taken similar steps, we give a big thumbs up to Aegon for being the first player in the advised space to make this move. We’ve argued for this for a long time at the lang cat and it’s great to see a provider being commercially brave and putting it in place.

If that wasn’t enough, also in the press briefing was the following statement:

“Aegon also expects to introduce a fixed charge for new ARC and One Retirement customers in 2015.”

We interpret this as a statement of intent that Aegon will ultimately join the ATS renegades up in Dundee and introduce its own fully fixed-fee structure. We’ll be looking to get further clarification on this before getting too excited (because, if yes, it’s huge news) just in case our comprehension skills are off kilter with this one.

Scores on the heatmap doors

So, onto our pricing heatmaps. As with the Cofunds update yesterday this is only a subset of the AUA levels and competitors we look at. Paid up subscribers to our pricing guide will get access to the full shizzle. Platforms only here, so we’re looking at ARC rather than One Retirement.

SIPP first:

 

Unsurprisingly given the new cap, Aegon now look incredibly competitive at the higher end as the fixed price really starts to kick in. At the sub-£500k levels significantly less so, and you can see the price remains very toppy.

Moving on to ISA land:

 

A very similar story to SIPP (what with the Aegon arithmetic being, y’know, the same).

The lang cat sayz …

We’re loving the move to a price cap, but the scores on the heatmap doors show it’s not all rosy in the Aegon garden. ARC is now clearly all kinds of competitive at the large fund values – but how much of the market pie does this realistically represent? ARC remains expensive, prohibitively so at lower fund sizes, so if this represents a tactical move by Aegon to be aimed further upmarket then it’s a bold one. We wish them good luck with that.

On the One Retirement side, it’s always good to see such a simple charging structure. The drawdown changes are positive, especially so soon after the budget update. The investment changes interest us, especially as they include a pledge that the insured funds will be very close mirrors of the underlying OEICs. We’ll watch that one with interest when details emerge.

So, on the whole it’s a positive step from Aegon. As you know, we see pricing shifts and tweaks all the time, but every so often one feels like proper big news. You’d expect us to say this but we hope that Aegon is the first of many to move towards the fixed fee model. We suspect our good ol’ heatmaps (cheap plug) will look significantly different in the months to come.

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About Steven Nelson

One third of team data. Certified millennial despite colleague views to the contrary. Known for his above average data and excel skills. Research and insight specialist with particular expertise in platform pricing.