Direct stakeholder sales are being driven by fractional pricing differences as employers shun performance in favour of cost.
Direct-offer website Pensionsbusiness.com says 82 per cent of schemes designated since its launch last year are stakeholder and half of these are Norwich Union's plan which has an annual charge of 0.8 per cent. This is marginally the lowest rate on the site which also features Legal & General, Clerical Medical and Scottish Mutual.
Clerical has issued its broker consultants with sales material demonstrating that the difference in pension fund performance can be 70 per cent.
Pensionsbusiness.com chief executive and proprietor of IFA Nightingale Associates Michael Lockyer says: “Stakeholder cannot go above 1 per cent so there can never be much difference on rates. Investment performance makes a huge difference but people glaze over when the issue is mentioned.”
Scottish Life head of communications Alasdair Buchanan says: “Employers buying direct are likely to go for the lowest AMC. The IFA market will be less commoditised and there will be less pressure to reduce rates.”