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CGU stakeholder plans won&#39t usethe &#39friendly&#39 tag

CGU is setting up a group and individual pre-stakeholder pension but is

avoiding the phrase “stakeholder-friendly” because it fears it could

confuse consumers.

The company says its plan, called Your pension @ CGU, plan meets all the

Government&#39s minimum requirements for stakeholder com- patibility in terms

of its char-ging structure and flexible contribution levels.

CGU believes the term stakeholder-friendly challenges issues of disclosure

in the pre-stakeholder phase as consumers are confused over its true

meaning.

There are no charges on the products until after stakeholder launches in

April 2001.

Switching to stakeholder after April 2001 will also befree, after which a

reducing scale of annual management charges will operate, with bigger

pension funds charged at lower rates.

Customers will pay a 1 per cent of fund value charge, reducing in steps to

0.8 per cent a year for funds over £50,000, or 0.6 per cent reducing

to 0.4 per cent a year for fee-based advice.

CGU is expecting a high take-up of the product because of its special

offer and simplicity, meaning IFAs will find it easy to explain the

benefits to their clients.

CGU says its directors are making it clear the product will “make it

through the merger” and will carry on under the new Norwich Union brand

aftera single marketing group is established this autumn.

CGU spokeswoman Fran Elliott says: “We have avoided the tag

stakeholder-friendly because we wanted to be specific about what we are

offering. We wanted to avoid confusing consumers with words which are not

very clear.”

Pensions Brief, p61

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