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Even the strong may not survive

There are 13 individual stakeholder pension products in this month&#39s table of stakeholder-friendly pensions. I assume this means the providers are really confident that everyone will just love these new, simple pensions so much they will buy one for themselves, one for the wife or husband and one each for the kids.

Raising the maximum age to 100 might also be a welcome source of new business, as would forcing our pensions regime on Europe to help our poor insurers achieve the volumes they all need to sur- vive in the low-margin, level-charge world.

As we already know, the systems and set-up costs associated with stakeholder and even the mono-charge personal pensions are quite frightening.

Providers will have to survive on less than nothing for several years before showing any return on their or their policyholders&#39 investment.

This period may be extended by several years if insurers are forced to follow companies such as Legal & General in tapering their charges over time in order to protect their hard-won business from predators.

Even the option of attacking other providers&#39 existing books is gradually withering as stronger companies such as Norwich Union gradually follow Standard Life in promising to convert current policies to a stakeholder compliant mono-charge structure from April next year.

This is good news for

NU clients but not so good

for those whose providers

cannot afford such a move.

This is a game for the strong and, for those with long memories, even Ronald Reagan could not make 20 per cent market share for each provider add up to just one whole pie. Or even 10 per cent for that matter.

Even for the strong, survival cannot be taken for granted. There is some concern that stakeholder systems are untested and some are not even in place.

It was a little disconcerting to discover in recent weeks that certain providers were experiencing difficulties in providing quotes for their mono-charge pensions.

Teething problems are, perhaps, to be expected but quality of service is one of the very few factors that will differentiate one provider from another in this market. Some may never recover from problems early on.

In the past, poor service from insurers has not just cost them repeat business but has had a similar effect on advisers using them. In the future, advisers may want to question if they actually have a duty to their clients to cut companies offering poor service at an earlier stage than they would have done in the past.

If such service is experienced widely in the market, a provider&#39s business levels could fall and there could be a penalty-free exodus of policyholders to the point where continued presence in the market is not viable.

Even Standard & Poor&#39s five-star rankings may not help here as there is a danger they reflect too much of past experience, in much the same manner as investment performance, and not enough of current experience or future capability.

Perhaps there is a requirement for someone to develop a consistent measure of service across a range of factors, frequently updated, of course.

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