Mass-market personal pensions are likely to disappear once the stakeholder regime is put in place in...
Mass-market personal pensions are likely to disappear once the stakeholder regime is put in place in 2001
Under Government proposals unveiled last week, there is to be a single taxation regime for stakeholder and personal pensions
As stakeholder will have a capped charge it should appear a more attractive buy, but still leave room for higher end, non-stakeholder products, including Sipps and drawdown
Andy Agar, pensions marketing director at Legal & General, said: "I see the market being split between the simple, stakeholder pension a plain, vanilla product and the more complex products. That is going to take out personal pensions. Products like Sipps will continue for the higher end of the market as will other products that allow features such as income drawdown and phased retirement
"There will also still be room for products such as group Sipps with, for example, 10 to 20 people, for high-net-worth individuals. These type of products would offer fund choice and investment flexibility
Agar added that IFAs should be able to operate in the stakeholder mass market, even if annual management charges are restricted to 1%, as was proposed by the Government earlier this year. He said that reducing the use of key features and individual fact finds in the advice process for relatively simple stakeholder pensions would help brokers to do this, as would IFAs providing stakeholder advice more on a group rather than individual basis
Paul Smith, head of pensions development at AXA Sun Life, agreed that there would be more polarisation in the pensions market between relatively simple stakeholder pensions and more complex products for higher-net-worth individuals
Smith added that the proposals would be likely to lead to more people saving for pensions which he said should be a positive for the IFA market
Another implication of the integrated regime is that it is likely to change the way in which pensions are sold. The Government's move to abolish carry forward/back will in effect create a pensions selling environment similar to that of Peps and Isas
Pension members will only have until the end of the tax year to make their maximum contribution or their tax relief allowance for that year will be gone
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