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GPPs set to benefit from &#39restricted&#39 stakeholder

Scottish Equitable is pred-icting that difficulties over providing

stakeholder plans could tip the balance in fav-our of group personal

pens-ions for many employers from next April.

The life office believes the restrictions and conditions surrounding

stakeholder will lead to a very limited uptake among smaller and

medium-sized employers. It suggests many will opt to take the GPP route

when planning pension provision for their staff.

From next year, all employers with five or more staff must offer their

employees access to some form of pension.

Pensions development director Stewart Ritchie says there are a number of

issues which tip the balance towards GPPs.

He cites the problem of not being able to offer a true with-profits fund

under stakeholder as one area of contention, claiming it is a “natural

investment choice for many investors”.

He also highlights how the employer has to consult staff and potentially

trade unions before adopting a stakeholder scheme whereas this is not

necessary for a GPP.

Ritchie believes decision trees could also hold pitfalls if they fail to

provide clear guidance. By providing a GPP, employers can avoid this

problem as individual advice is part of the overall package.

Ritchie says: “Stakeholder is being loaded up with hassle, particularly

from a small or medium-sized employer&#39s point of view. The restriction the

Government is putting on stakeholder means that for many employers the

easier and better choice will be to opt for a GPP.”

GPP opportunity, p58


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