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Abbey quits group stakeholder sales

Abbey National is pulling out of new group stakeholder pension business as the battleground for market share moves to transfers and growing existing business.

The company is the UK&#39s ninth-biggest stakeholder provider with 2,500 company stakeholder schemes. It says there is no point in wasting resources trying to chase new designations as all UK employers with five or more staff were legally required to pick a provider last year.

But industry figures question whether Abbey will make a profit out of stakeholder without seeking new business as it is nowhere near the 20 per cent market share that analysts consider to be the minimum to make a profit in stakeholder.

Abbey is the latest provider to pull out of the group market following Marks & Spencer&#39s recent withdrawal.

It says it will continue to service its existing group stakeholder clients and will sell individual stakeholders through its branch network and its Scottish Mutual subsidiary will continue to operate in the market.

Abbey director of life, pensions and investments Paul Masters says: “Virtually all employers appear to have designated their group stakeholder pension provider so there is an extremely limited market for new business.”

Prudential media relations manager Darragh Leeson says: “The stakeholder market is developing and the new battleground is the populating of existing designations and securing transfers and increments to existing schemes.”

Roberts Clark director Ashley Clark says: “To say they are happy to farm their existing book is a smokescreen. Stakeholder is a loss-leader. Abbey have done the number-crunching and realised they cannot make any money out of what they have got.”

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