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&#39Worksite marketing is way ahead for pensions&#39

Closing the savings gap through compulsory pension contributions would require a politically unacceptable compulsory contribution of 15 per cent of salary, according to Oliver Wyman & Co, the consultancy which first valued the shortfall at £27bn.

The consultancy also claims that raising the 1 per cent charge cap on stakeholder would not deliver an increase in distribution.

It says worksite marketing of pensions is the way forward but argues that this can only happen if the cost of sale and advice is reduced from the current average of £75 to £25.

The firm says deregulating the advice process and introducing simpler off-the-peg products could reduce the sales cost to £25 and generate increased savings from lowto middle-income households by 75 per cent.

It supports the US 401k approach which incentivises senior management to encourage take-up of company pensions by employees by linking their own tax relief to that take-up.

Oliver Wyman & Co senior manager Andrew Rear says: “With a 1 per cent a year charge, it takes a £40 a month policy around six years to recover the £75 cost, ignoring all other costs. At 1.5 per cent, the picture is little better – perhaps five years.

“The UK is a heavily regulated and advised market, meaning the cost of sale needs to be reduced to make it attractive for advisers to sell into the target customer segments.”

Roberts Clark director Ashley Clark says: “My view will not be popular with IFAs but raising the 1 per cent cap is just increasing commission to IFAs.

“Putting the annual management charge up to 1.5 per cent would make a lot of policies more expensive than oldstyle personal pensions over the long term.”


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A bull case for US equities?

Neptune video: a bull case for US equities?

Watch Felix Wintle, head of US equities at Neptune, discuss why he believes US equities are in a structural bull market and the key factors that can drive the S&P 500 higher.

In the video, Wintle addresses the following:

• The US market and why — despite equities rising from 2009 — he believes the structural bull market only started in 2013
• Key economic and corporate factors that can drive the S&P 500 higher
• Investment themes and sectors offering exposure to the domestic recovery


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