prudential and scottish widows both making charges of up to 50% more
The FSA's comparative tables show stakeholder policyholders with Prudential and Scottish Widows pay at least 50% more in charges and deductions than Legal & General clients.
The FSA, using data collected by external fund analysts, The Research Department, found a 25-year-old paying £100 a month into an L&G stakeholder, assuming 7% per year investment growth, would pay a total £29,064 in charges and deductions over the lifetime of the policy up to age 60.
Someone paying the same contributions into a Prudential Stakeholder pension plan would have to pay £46,372 over the same period. A Scottish Widows policyholder would pay £46,187.
Andy Agar, director of pensions marketing at Legal & General, said the company is able to offer lower charges to those who invest directly.
The cost of charges on stakeholder contracts offered through IFAs is about £10,000 higher, at £39,260. He denied the price differential would pose a threat to intermediaries, saying people are not confident making pensions decisions without advice. The FSA data also highlights the large difference in costs between other personal pensions.
Prices range from £63,500 at the top end of the charging spectrum for a Canada Life Personal Pension Plan, while stakeholder offerings occupy the lower end of the charges and deductions spectrum.
Stephen Tsu, executive director of strategic development at Canada Life, said the group aims to have a reduction in yields of no more than 1.5% and the comparative tables do not tally with his calculations of competitors' charges.
He said: 'If you look at projections of our competitors, they come much closer to ours, or are even at the same level. Providers give their own projections to the regulator; maybe there are discrepancies in some figures.'
Other providers with high charges include Allied Dunbar's Individual Retirement Plan, which has fees of £54,042, and Winterthur Life's Personal Pension Plan, which is linked to the Deutsche Managed fund. It has charges of £47,300.
The Standard Life With Profits One fund comes in cheaper than stakeholder products at £17,543. John Lawson, senior technical manager at Standard Life, said it is able to offer lower charges because it does not seek to make profit margins on with-profits contracts.
Another provider with relatively low fees is Scottish Life's Talisman Personal pension plan, with charges of £26,700.
Mark Hayes-Newington, group commercial director at the Research Department, said despite the appearance of being fairly homogeneous, there are considerable variations between the costs of stakeholder plans from different providers.
He said: 'The FSA's Comparative Tables are a useful source of information. That the information for each plan is presented on the same basis gives tremendous credibility to the data. In particular, the data quantifies the effect of charges and deductions over the course of a pension's life.'
FSA's comparative tables are available at www.fsa.gov.uk.
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