Scottish Life's head of pension strategy Steve Bee adopts a lightweight strategy when dealing with the heavyweight subject of stakeholder.
Against a soundtrack of Bob Dylan, Bee guides his audience through the intricacies and inconsistencies of the DSS' stakeholder pension guide for employers. The message behind the CP61 Revisited roadshow, a whirlwind tour of the UK, is that IFAs have a pivotal role in the stakeholder market.
Rather than advice from IFAs being pushed out by decision trees, Bee says the DSS is actually promoting the IFA cause by making the handbook so complicated. He says: “A handbook on pensions containing more than two million words should be crystal clear but the stakeholder pension handbook is not written in English.”
The DSS is making a complex situation more complicated from the start. The handbook has been sent to employers with more than 10 employees but, as Bee points out, stakeholder applies to employers with five or more employees so, immediately, part of the target market is being ignored.
Bee says the fundamental problem, however, is the hand book is not a comprehensive guide for employers and they will need assistance to establish whether their business is exempt and if their employees are relevant.
To claim exemption, an employer must have no relevant employees, yet deciding who is relevant is not easy. According to Bee the handbook only outlines ways that an employee is not relevant for stakeholder and leaves it to employer to determine who is.
Sparing no expense, Bee and his sidekick, business development manager Paul Goodwin, present a series of matchstick-men diagrams to illustrate who is relevant.
Employees earning less than the lower earnings' limit, those under 18 and those within five years of the normal retirement date are all considered not relevant.
Members of acceptable alternatives, such as an occupational pension scheme, are also not relevant but Bee says GPPs are a worrying exception as not all of them meet the required criteria and many employers might automatically assume employees covered by a GPP are not relevant when they could be.
For a GPP to qualify as an acceptable alternative, it must comply with four rules, including a mandatory employer contribution of 3 per cent basic salary and employee contributions being deducted from payroll. Bee points out the inconsistencies of this rule saying: “Personal pensions in GPPs cannot have certain kinds of extra charges but front-end loading is still allowed.”
The message behind Bee's presentation is that IFAs are in a privileged position and should use their knowledge to approach employers about stakeholder.
Employers are not allowed to talk to their staff about regulated products, they cannot recommend a scheme or advise an employee whether they should join. But, as Bee says, IFAs can.
Employers will not want to become pension experts. They want an easy solution to their pension problems rather than becoming more confused by the handbook. Bee is encouraging IFAs to step in, help the employer in product advice and establishing who is and isn't relevant.
Bee says: “The handbook is the best advertisement for IFAs. Employers will want advice and IFAs should do well from this.”
This is obviously a message IFAs want to hear and the response to Bee's presentation is extremely positive.
IFAs say they would use Bee's ideas as practical ways to approach employers. More stead Financial Services consultant Alan Wodzynski says the handbook will make an excellent marketing tool.
The comic delivery leaves the audience with smiles on their faces and IFAs feel that the contrast of facts and jokes means they are more likely to remember the overall message. The only negative comments is from IFAs exp ecting a more technical presentation but even they enjoy the light-hearted format.
Wodzynski says: “The del ivery was brilliant and got the message across very clearly. If you can make people smile and laugh then they will learn.”