From recent reports in the press, Widows has had reasonable success in establishing itself on the stakeholder panels of major IFAs. This, combined with Widows' financial strength and strong brand, is likely to help ensure its viability as a long-term player in this market, always dependent, of course, on its ability to maintain a high level of service on this product.
Clients and advisers less concerned about cost and more interested in investment flexibility may be attracted by the external fund links. But it is
a little disappointing that these are still restricted to balanced managed funds, giving limited scope for adding value through investment advice.
Abbey' offering is, presumably, aimed at the bank's own clients rather than specifically those of IFAs. This offers an interesting choice of default investments, based on three possible attitudes to risk – cautious, balanced or speculative.
A unitised with-profits option is included and serves as the default option for cautious investors. No minimum premium, together with optional waiver of premium benefit and life cover, serve to make this an attractive package although, for schemes with higher premiums, the alternative offering from Scottish Mutual, in the same group, may prove to be the better choice.
There has been a fair amount of comment on the fact that banks should do well with stakeholder but it is unclear why customers will be any more disposed to use banks for pensions than they have been in the past.
Winterthur Life's group personal pension is quite clearly aimed at the bigger end of the market. A minimum annual premium of £50,000 probably requires at least 50 lives or some very high contribution rates. A basic 0.8 per cent AMC is charged by unit encashment, which does not allow for any adviser remuneration. Other companies' nil-commission terms may, therefore, be more attractive, particularly if all that is required is a simple scheme, although Winterthur does advise that special terms can be negotiated based on the individual scheme.
With the AMC of 0.8 per cent, we are advised that 11 funds are available to a scheme, including six external funds, although four of these are managed funds from Baillie Gifford, Deutsche Asset Management, Schroder and BGI.
A much wider range of fund links is available but charges would be recalculated depending on scheme and premium size as well as the number of links available. For a sufficiently big scheme, the wider range of funds provide attractive opportunities for advisers to add value through investment selection. A with-profits fund may be added at a later date.
There is now a reasonable choice of mono-charge group personal pension products available to advisers looking to meet stakeholder charging terms in the run-up to April 2001. Friends Provident, Clerical medical, Scottish Amicable, Scottish Mutual, Scottish Widows and Standard Life already account for a large share of IFA business in the pension arena and these plans should help ensure their continued success.
In addition to the products listed in the table, Sun Life now has a suitable product on offer and Legal & General's guarantee of “no-worse” terms from its GPP also make this product a contender. There is less choice on offer for personal pensions but it is arguable that there is less scope to find economies when giving advice at an individual level. Until more providers offer a personal pension option, IFAs' only choice of avoiding material disadvanhtage is the main considerations to adapt terms of existing personal pensions by common sacrifice.