Capita has hit out at claims by product providers that they could take 20 years to break even on the new stakeholder products, saying it could be as little as six years.
Managing director Steve Parkinson points to the model that Capita is working on for child trust funds, where six or seven providers use the same infrastructure and share costs. He believes this model could be translated across to the Sandler suite of products if providers are willing to give up having admin as a differentiator between their offerings.
Parkinson says the model could cut the time to break even to six or seven years from estimates of over 20 years from Royal London, which calculated the time on what would happen if the costs of product set up were invested alternatively.
He reveals that Capita is going to apply the model to the Sandler suite and is keen to talk to providers.
Parkinson says: “With the stakeholder products, companies will be spending millions on IT systems and will never break even as they will never recover the investment they made.
“A number of them are fighting shy of Sandler as they burnt their fingers on stakeholder pensions but if they looked at a different business model with communal infrastructure and communal administration, they may well be able to offer the range.”