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Dress-down pension day

If employers exploring options in workplace pensions can guarantee one

thing, it is that they can look forward to a veritable army of providers

and intermediaries beating a path to their door offering good service and a

variety of solutions.

But can the same be said of the employees who are the ultimate end-users?

With commission dwindling, intermediaries are increasingly focusing on the

relationship with the employer and employees are becoming the forgotten

customers of many group personal pension schemes.

Virgin Direct&#39s move into the GPP marketplace is challenging this trend

and identifies employees as an essential and important part of the package.

Both for employees and employer, there is a need and a demand for workplace

schemes which will bring a human face to pensions, introducing a dress-down

way of doing business – straight-talking, great value and different.

Many might argue that the financial realities of 1 per cent mean

intermediaries must focus on the employer rather than the employee.

However, there is plenty of room for relationships with both constituents

of the workplace pension. We are aiming to refresh the parts others can&#39t

reach and in a target market of small to medium-sized entrepreneurial

businesses, reputation will prove central to opening the doors to

businesses unlikely to identify with the traditional intermediary/provider.

This presents great opportunities not only for enlightened providers but

also for enlightened IFAs because the group market is ripe for benefiting

from new and markedly different approaches. Who knows, we could even see

IFAs selling Virgin group pensions.

That key market, SMEs, is an area neglected to some extent by traditional

providers. Large schemes and economies of scale have been the watchwords

for many providers and intermediaries. The smaller businesses have been

left on the shelf. Companies with a reputation for innovation, customer

focus and quality products will appeal to that market.

The future of servicing such a market centres on a workplace marketing

capability coupled with excellent call-centre/website operations and an

ability to provide one-to-one advice to employees, all within a 1 per cent


Such operations can and will provide employees with a service that really

adds value.

Fleet-of-foot operations also have the skills and systems in place to

tailor service packages and deliver internet or telephone-based systems

which will make life as easy as possible for the small to medium employers.

A brave new world of group pensions is just around the corner with the

impending arrival of stakeholder. The market is set to expand enormously

through the requirement for all those employing five or more staff to offer

a stakeholder scheme. But to compete in this new world requires an ability

to operate within the 1 per cent cap on charges. For the past five years,

Virgin Direct has successfully been operating within the 1 per cent margin

and has established itself as a direct pension provider in an intensely

competitive marketplace, selling more than 25,000 pensions in three years.

Experience of operating within that margin will be vital in the

stakeholder world and clearly there is already a market for the

stakeholder-standard pension.

Interestingly, the ABI last month reported sales of pensions down by

5 per cent in the first quarter of this year and cited stakeholder blight

as a factor in the run-up to April 2001. However, pension sales at Virgin

were up by a third over the same period. Clearly, the pensions world is

changing and IFAs and providers who see the opportunities ahead can turn

them to their advantage.


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