Nowich Union is pulling out of the smaller group stakeholder market and will take on no new schemes ...
Nowich Union is pulling out of the smaller group stakeholder market and will take on no new schemes with less than 20 members. From 1 July, the group will continue to run its existing book of business but will not take on any more except in special circumstances.
Norwich Union was at the forefront of pushing stakeholder to the mass market with a campaign that targeted small and medium businesses.
Head of pension development, Iain Oliver, said the decision to focus on larger schemes reflects the failure of Government policy to attract serious volumes of business from large sections of the market. He added: 'Employer contributions and take-up rates have been disappointing. The stakeholder initiative has not been massively successful.'
The life office it is to close the Group Your Pension (GYP) and Group Your Pension Select schemes to new business from 1 July. All new business will be administered through the Designer pension and Millennium Series Variable Money Purchase and Group AVC contracts, which only cover businesses with 20 or more employees. The GYP scheme took business from firms with five employees or more.
The life office is keen to focus on larger employer sponsored schemes and high net worth individuals and is enhancing its Designer range. From July 2003, there will be a percentage premium commission on the range.
Additional external funds will be added as well as member online access and the ability to take in money transfers from winding up Comps and Cimps.
The group has based its decision to close the GYP range on the poor state of parts of the pension market. It believes there is an increasing reluctance among employers to pay fees for advice in current market conditions.
Alan Steel, managing director of Alan Steel Asset Management, disputes this analysis. He said: 'Life offices tend to give spurious reasons for getting out of markets they do not find profitable. Our evidence is that when employers are told the real cost of not paying for advice, they are happy to pay fees.'
Oliver added that existing GYP schemes will not be neglected as they will be developed alongside the Designer range and put onto an IT system that will support both schemes.
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From 1 March