Providers have hit back at claims many intermediaries are not considering pension term assurance (PTA) as an option for their clients.
A recent survey by IFA portal Assureweb suggested more than half of the 500 intermediaries surveyed (57%) are not considering PTA as an option, with some unaware of the product’s tax saving benefits and others confused about the regulatory regime.
Stephen Wynne-Jones, director of sales and marketing at Assureweb, says: “The fact that so many advisers are steering clear of PTA, despite its well-documented benefits, is a concern that needs to be taken seriously. The industry as a whole needs to do more to reinforce the important part this product has to play in the financial advice market.”
But Andy Milburn, IFA market manager at Royal Liver, says the provider has doubled its life cover sales since May 2006 and the Assureweb survey “is not the picture that we are getting from our limited number of IFAs”.
Likewise, Rob McKie, head of marketing at Scottish Equitable Protect, says take-up of their life protection with tax relief (LPTR) PTA plan “has been exceptional and has exceeded our expectations for so early in the market’s evolution”.
The percentage of ScotEq Protect’s life business being written as LPTR has increased from approximately 10% soon after launch to nearly 40%.
McKie states: “This is a significant percentage of our business and has produced a significant amount of premium income already. This is slightly ahead of our expectations at launch. Consequently, from our experience I would have to disagree strongly that PTA has not been as popular as expected.”
He expects the percentage will continue to increase over the rest of the year to nearer 50% of the life business.
Bright Grey launched its PTA product at the end of May and Nicki Lundy, communications manager, says the take-up has been pretty much as anticipated.
She says: “Some advisers are already recommending it, others are moving more cautiously – which is what you would expect with a new product.”
But Lundy adds there is still the concern the tax efficiency of PTA is used as an opportunity to churn business, rather than to grow the protection market.
“The industry really needs to get away from its obsession with price and its focus on existing client bases,” says Lundy.
Ian Jefferies, head of protection marketing at Friends Provident, says he is encouraged by the amount of new business Friends Provident is receiving but he recognises it is still “early days”.
He states: “We launched on A-Day when there were only three PTA products available. We are aware that some IFAs were waiting for more providers to enter the marketplace to see how the premiums would settle down.”
Gerry Warner, protection development manager at Zurich, suggests some IFAs may be concerned about clients exceeding their lifetime limit on PTA products and, as a result, attracting a tax liability.
Zurich launched a PTA product for the multi-tied distribution network Openwork and it is now developing an IFA proposition.
Warner adds: "We are very pleased with the sales of Openwork. PTA has benefits for consumers in terms of tax relief and IFAs just need an awareness of the tax implications. I can see the market expanding."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
Follows McVey's resignation
Schroders and Aviva Investors
LightTower Partners, Seneca Partners and Unicorn AM
Integration with Money Dashboard
View from the front row