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's 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