Type: Cafeteria-style company pension plan.
Minimum premium: £20.
Minimum group size: 5.
Minimum-maximum ages: 16-74.
Fund links: With-profits, balanced managed, cautious managed,
adventurous managed, non equity managed, international, UK equity,
equity high income, ethical, UK equity tracker, UK smaller companies,
European, Japan, North America, Pacific, cash, gilt & fixed interest,
index linked, property, retirement protection, Halifax.
Charges: Annual up to 1 per cent.
Allocation rates: 100 per cent.
Minimum term: None.
Options: Group personal pension, group money purchase and group
additional voluntary contributions.
Commission: Subject to negotiation.
Tel: 01275 554356.
Stuart Smith, Director, RJ Hurst & Partners, Nick Upton, Consultant, Ian Cooke & Partners, Alan Rangecroft, Consultant, Berry, Birch & Noble, Chamberlain Eke, Senior partner, Anthony Chambers.
Investment options 7.3
Company's reputation 7.5
Past performance 6.5
Product literature 6.5
Clerical Medical's Futureproof is a cafeteria style company pension plan that offers a menu of group personal pensions, group money purchase schemes and group additional voluntary contributions package and is designed to cater for the retirement needs of employees at all levels.
Assessing the product's suitability to the market, Smith says: “The plan offers a comprehensive range of options which should cater for the needs of the vast majority of employers. With the added benefit of a with-profit fund option, the plan should prove very popular with IFAs.”
Eke says: “It will fit quite nicely into the group pensions market. It offers the flexibility of group personal pensions and has the adaptability to include group money purchase and AVC with a stakeholder charging regime.”
Upton says: “Clerical Medical has designed this plan to sit alongside similar plans offered by its competitors. In common with most others it has designed a new single charge contract.”
Rangecroft thinks it incorporates current trends in pension contracts with regards to charges, commission payments and contract terms.
Identifying the types of clients the pension is suitable for, Smith says: “Typically, the small to medium-sized corporate client looking to either review existing pension arrangements, or to install a pension scheme for the first time.”
Eke says: Group personal pensions are generally targeted at small to medium sized companies but this plan can also be suitable for larger organisations. The additional voluntary contribution, group money purchase elements and the pension target option would appeal to larger companies.”
Turning to the kind of marketing opportunities the plan will provide, Upton says: “For the IFA wishing to market pensions in the new environment it is useful to have another reputable company such as Clerical Medical.”
Rangecroft says: “It is a single source provision to employers of pension benefits that is variable according to the employee category.”
Eke says: “It has a little bit of everything in terms of group pensions so it should be marketed quite easily. For clients new to the group pension business, it offers a reasonable first step into the market.”
Pointing out the strong points of the product, Eke says: “In my opinion there are two major strong points. The first is the flexibility and adaptability of the plan. it offers a lot of different options. The second is just the single one per cent charge and no other charges.”
Smith says: “The most significant feature is the inclusion of a with-profits fund, which is likely to be popular among the target market. It is also very useful to have a wide range of options, with group AVC included within the one common charging structure.”
Upton says: “Clerical Medical's reputation and investment record to me are more important than the nuts and bolts as those seem to be similar to a few other companies.”
Discussing the investment options, Rangecroft says: The investment options are good. They are wide ranking and flexible to suit most attitudes to risk.”
Smith says: “There are no obvious gaps, with Clerical Medical offering funds to suit almost every taste apart from the most esoteric. Only the absence of external fund links will be criticised by some IFAs, but in my opinion, Clerical Medical's performance is strong enough to justify this exclusion.”
Identifying the disadvantages of the plan, Eke says: “There are no serious disadvantages to the plan. It would have strengthened the plan enormously if they had been able to establish external fund links with specialist investment houses.”
Upton complains that there are no specialist funds such as technology and bio-tech, for brave, young investors.
Rangecroft says: “The commission and charging structure is fixed at the outset and cannot be changed to accommodate future eventualities.”
Moving onto the product's flexibility, Eke says: “It is a very flexible product. It is difficult to see how any other providers could come up with a more flexible product.” Rangecroft thinks the flexibility is good.
Smith says: “The umbrella structure gives the IFA as much flexibility as is likely to be required, as it means that employees can switch between group personal pension, group money purchase and even stakeholder, with the minimum of administration hassle.”
Assessing Clerical Medical's reputation, Eke says: “A few years ago it was in the doldrums and struggling. It now seems to have turned it around and seems to be doing very well.”
Rangecroft thinks it is quite good and that it should improve with the financial strength of the Halifax following the merger between the two companies.
Criticising Clerical Medical's performance track record, Eke says: “It has one or two funds with good performances in their sector, particularly in the managed sector. Overall, the performances are average and there are other providers with better performances. There are, and will be more, new entrants into group pension market who will offer better performance.”
Smith says: “It has a strong and consistent track record across a range of funds, but in particular its with-profits, Europe and the UK.”
Rangecroft says: “It is not particularly outstanding except perhaps for its managed fund, which has good past performance.”
Identifying the likely competitors, Eke says: “There are plenty of products being launched to meet the stakeholder requirements post-April 2001. Companies that have a charging structure of less than 1 per cent have more funds available and offer the same flexibility will be the main competitors. They will probably need to make a short-term loss.”
Smith says: those offered by Standard Life, Norwich Union and Scottish Life. Rangecroft can see no competition. Upton suggests Standard Life, Scottish Equitable, Norwich Union and Legal & General.
Smith and Rangecroft think the charges are standard for the stakeholder regime. Eke says “Any plan with a charging structure of 1 per cent or less, no policy fee or initial charge and no bid offer spread has to be reasonable.”
Moving onto commission, Upton thinks it is par for the course. Rangecroft says: “The commission choices conform to the new charging environment and is only adequate if Clerical Medical delivers on its promise of streamlined administration.”
Eke says: “There is a wide range of commission options to suit every adviser. It is unreasonable to expect too much in terms of commission with a 1 per cent charge. Although higher commission can be taken, this is not recommended as it will make the product less competitive.”
Looking at the product literature, Upton says: “It is clearly written but not terribly exciting I'm afraid.” Smith says: “It is clear and concise, although the employers' guide would benefit from looking more like the guide for advisers. The members' guide is very clear and informative. It tackles difficult subjects, such as contracting-out, in a very sensible manner.”
Eke says: “I like the way the literature has been put together. There are three brochures – one each for the adviser, employer and members. There are no loose bits of paper to drop off and the information is clear and to the point. It could have been useful to have the available funds included in the documents.”
Rangecroft says: “It is clear and attractive but the guide for members is too generic. A member reading this would not know if they were in a group personal pension plan or in a money purchase scheme.”