Scottish Equitable is to launch a “son of with-profits” unit-linked smooth managed fund in the next month.
It intends this product to be the main fund for bonds and an option for pensions. The smoothing element is likely to be diminished.
Industry commentators say a unit-linked structure would be financially attractive as it would be less capital-intensive.
Public relations manager Lesley McPherson would not comment on the plans but says: “Both Sandler and the FSA with-profits review thought the with-profits concept worthwhile. The issues have to be greater consumer understanding and transparency.”
The Abacus director Philip Martin says: “Clearly, the industry wants to continue to milk the cash cow but without the costs of providing guarantees or smoothing. If both are removed, should it still be marketed as with-profits?” Jamieson Financial Planning principal Bruce Jamieson says: “The with-profits concept is a good one, it just has not been done properly so they try a new concept. I wouldn't fancy being a new investor or adviser for the first few years.”