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Buoyant GPPs to the rescue as stakeholder sags

The FSA is concerned about low sales of stakeholder pensions – an event so predict-able it could have been printed on any financial services calendar for winter 2001.

Readers should note that the official line is that stakeholder will receive the same scrutiny as any new product but the “line from officials” is slightly different.

Specifically, the FSA is concerned about how robust sales of group personal pensions are proving when compared with stakeholder. Politically, it would have been amazing if stakeholder did not come in for special attention.

The FSA is right to be concerned and yet should it be surprised?

Stakeholder is a difficult product to sell because of the marketing constraints from the price cap. In the last few weeks, it has arguably led two providers to retire hurt while Misys research this week confirms what Money Marketing had already pointed out – that two providers, Norwich Union and Standard Life, have stolen a significant lead over the rest.

In its obsession with price, the regulator must remember that the intention of the pension reform was not to promote a prod-uct, even if it has the credibility of mini-sters and officials pinned on it, but to leave more people better off in retirement. If GPPs are selling well, particularly GPPs on revised terms, then it is a bonus.

The employer contributions involved mean scheme members are much less likely to spend their retirement in poverty.

Stakeholder might just prove to be the spur IFAs need to deliver employers and employees with something better than stakeholder and a good thing too.

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