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Clerical closes to GPPs in stakeholder admin crisis

Clerical Medical could struggle to re-establish itself in the group pension market, according to leading pension IFAs, after its stakeholder strategy backfired, forcing its closure to new group business until the first quarter of next year.

The company says it has been swamped by unprecedented levels of business after it ruled out cherrypicking of group schemes as part of a strategy to bring in high volumes.

The move, which is estimated will cost the life office £63m, is prompting IFA fears that Clerical is just the first victim of the stakeholder environment and that other stakeholder offices could withdraw from group business before the October deadline.

The company&#39s group pension business increased by 43 per cent over the first six months of this year from £30.8m to £44m and it will have processed 2,600 schemes with contributions by September.

At that rate, Clerical looks set to miss £63m in new business by the end of the year. It admits it could lose out on 1,500 schemes by Q1 200s. The group remains open for individual personal and stakeholder business.

Pensions strategy manager Nigel Stammers says: “We fully understand our challenge is to make IFAs have confidence in us again. We have been open to all schemes and have not been cherrypicking. Other companies may have been cherrypicking, which could have had consequences on the schemes we have taken on.”

Dennehy Weller & Co managing director Brian Dennehy says: “There is evidence that most life offices are struggling because of stakeholder but are just about hanging on by using emergency admin teams.”

Richard Jacobs Pensions & Trustee Services director Richard Jacobs says: “It looks like the death of their group business. It will be incredibly hard for them to come back in to the market while other companies compete aggressively.”

Norwich Union head of corporate pensions Iain Oliver says: “The market has been a test for us all. We have had our issues and need to constantly look to reduce the age of business pending but are a long way from withdrawing.”

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