CIS is closing its traditional with-profits fund to new personal and group pension business following the launch of stakeholder.
The move, designed to strengthen CIS's fledgling with-profits fund for stakeholder, sees CIS committing itself firmly to the new pension vehicle at the exclusion of personal pensions.
Life companies have struggled to find solutions to setting up with-profits funds for stakeholder because of DSS rules requiring capital in stakeholder schemes to be ringfenced.
Other life companies setting up ringfenced stakeholder funds are also offering pension products which offer the benefits of the financial strength of their existing with-profits fund within the 1 per cent cap.
But CIS has refused to take such a step as it believes there are potential pitfalls in running two different with-profits pension funds side by side.
CIS's existing 350,000 with-profits personal pension clients will stay in the main life fund and any additional payments they make will go into that fund. Existing with-profits charges will be reduced to a maximum 1 per across the scheme.
CIS chief actuary (life) Tim Bunch says: “Having one product reduces the risk of comparison and reduces the risk of misselling or misbuying. When we introduced personal pensions, all our new customers went into them and no one bothered about older products.”
But Torquil Clark pensions development manager Tom McPhail says: “I do not think the battle between stakeholder and personal pensions is over. I am not convinced that stake-holder will prevail to the exclusion of personal pensions.”