With the end of the rocky Isa season of 2001 comes the introduction of the first new pension vehicle...
With the end of the rocky Isa season of 2001 comes the introduction of the first new pension vehicle for more than a decade stakeholder pensions.
So much has it been talked and written about you could be forgiven for thinking it has been around for two years already. But no, its official launch is the 6 April and, as of 7 October, employers will have to offer access to the product if their employees are considered relevant. That gives employers and intermediaries alike just over five months to figure out if their employees are relevant or not not as easy as one would think. As Scottish Life's Steve Bee points out in this week's issue in his decision tree for advisers on relevancy, stakeholder pensions are anything but simple.
Even up to the final week prior to the product's launch there are still a number of issues outstanding and these could affect whether or not intermediaries can even sell the product; small details such as the final regulations on acceptable investment choices like with-profits funds. While a few groups have made this the default option for their product offering, it has never actually been agreed that it counts as an acceptable investment option. The FSA has even started a review into with-profits products, which makes it even more tenuous as an offering.
With no real differentiation in price between stakeholder products and with the FSA keen to make sure past performance is not an important consideration, intermediaries are going to find it tough to reason why they should recommend one provider over another. Yet despite all the problems and complications this 'simplified' pensions regime has created it is already a success. The 6 April date marks the first radical change in the UK pension world in a long time and for that it should be noticed. While stakeholder has had many critics it has already caused ripples of change in the rigid world of pensions. Charges have fallen, investment choice has widen, technology has streamlined processes and product providers have consolidated in order to meet the challenges of operating in a 1% world.
Stakeholder has also created change in the manner in which pensions are sold and intermediaries are having to adapt. The issue of fee-based remuneration has been raised, changes have been made to fact finds and advisers are having to look beyond the one product and create packages for their clients in order to make it worth while to sell. The fact that stakeholder has already done some good in the pensions world has happened almost in spite of the Government and its endless amendments to pension legislation.
The chairman discusses his surprise holiday job
Three months on
Regulator has stepped in
More than £70m spent on project