With only weeks to go to the launch of stakeholder pensions, groups are still debating the pros an...
With only weeks to go to the launch of stakeholder pensions, groups are still debating the pros and cons of the product at the same time as readying their offerings to the market.
While groups such as Nationwide are announcing their decision to launch stakeholder products and other groups are looking at developing multi-tie arrangements, such as the Legal & General and Barclays deal, to sell the products, questions are still being asked as to whether the product will be a success.
Legal & General has published figures showing that the Government could make £3.86bn in fines from firms who currently do not offer access to a pension for their staff and do not intend to do so or are undecided.
Adrian Boulding, pension strategy director at Legal & General, said: "Our figures show 31% of those who said they intend to seek advice would do so from an IFA, compared to 29% from a bank, 14% from an accountant and 13% from a pensions company."
The group research also shows that even though firms employing less than five people are exempt, 22% of them plan to offer a stakeholder pension to staff none the less.
At the same time, Royal & SunAlliance is promoting the fact that stakeholder pensions are on the road to success.
According to the group's survey of IFAs, almost two-thirds of intermediaries said they believed stakeholder pensions would succeed but predicted that it would account for less than half of their pension sales in the future. However, for stakeholder to fulfil its potential, employers need to understand the implications and how it fits in to their total employee benefits package, presenting business opportunities for IFAs, according to Andy Milburn, corporate promotions leader at Royal & SunAlliance.
He said: "As the launch date draws near, IFAs still have confidence in stakeholder but different issues are beginning to emerge.
"Our survey illustrates that not enough employers are utilising this opportunity to review their employee benefit package.
"During each debate, this apathy was attributed to employers' lack of awareness, knowledge and understanding of the changes heralded by stakeholder."
Within the survey remuneration was a consistent theme with IFAs, Milburn said. "Fees are increasingly being charged and are helping IFAs to compete in the 1% world by clearly differentiating charges from remuneration. Some 35% of IFAs felt fees would become the second most popular form of remuneration in the future, just behind renewal/fund commission, which 39% of IFAs favoured."
Advisers expect fund-based commission to be the most popular form of remuneration in the future, which is the case in other overseas markets such as the US and Australia.
This reinforces Royal & SunAlliance's belief in the importance of investment performance, as the top fund managers will maximise returns and generate higher incomes for advisers, he said.
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Joined as head of strategy, multi asset, in June
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