One million stakeholder pensions sold cannot be bad. And from watching the statistics produced perio...
One million stakeholder pensions sold cannot be bad. And from watching the statistics produced periodically by the ABI, I believe we have now passed this milestone.
Over half of these will have been sold through the workplace linked to employers' company pensions. This is a great achievement, which I feel we ought to celebrate. But, in reality, a lot more still needs to be done to simplify the buying process if we are to reach the Government's target of four to five million workers saving in stakeholder pensions. Where should we look for improvement?
There is nothing wrong with the quality of the product, where prices at under 1% are offering the best value for money pension savers have ever seen. And there is nothing wrong with the quality of advice either, where today a rigorous training and examination programme ensures that all financial advisers are fully qualified.
I believe we can trace the problem straight back to the workplace. If people ask for guidance on pensions from their employer or financial adviser, they are pitched into a complicated purchase process that clearly puts them off applying.
But for people who buy their stakeholder pension direct, the process is quite simple. The Government must correct this anomaly, which demotivates employers, and relax the regulations on stakeholder sold through the workplace before the take up of this value-for-money pension will rise.
The FSA has produced guidance notes for employers that, in my view, just make matters worse. Even if the employer is paying money into a stakeholder pension scheme for its workers, the FSA's guidance says the company is forbidden from promoting the scheme and encouraging people to join it.
With the prospect of an unlimited fine or up to two years' detention for breaching these rules, it is no wonder employers are frightened to say anything. The employer is left with no other option than to offer staff a pension scheme without any endorsement.
And financial advisers are caught by the fact-find requirements if they want to say anything that might be interpreted as individual advice to employees. For a product with built-in safety features, why can't we say just do it, especially when the employer is contributing as well?
I gather that this needs a change of law, so we need both the Treasury and the FSA to see sense together in a display of joined- up Government. My model for the future is that when financial advisers are installing a stakeholder scheme, one of their tasks will be to train the key staff with human resources and personnel responsibilities in how to communicate about the pension scheme.
Then the employer can give ongoing promotion to its pension scheme and encourage any new workers to join without delay ' and not need to maintain chaste silence until the adviser's next visit to the worksite.
This idea just could appear in the forthcoming Pensions Green Paper. And it would be a much more positive approach to retirement planning than taking the much-rumoured swipe at our tax-free cash sum. So come on Messrs Brown and Smith ' the industry has produced first-class products and people, just give us the freedom to operate.
Adrian Boulding is pensions strategy director at Legal & General.
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