IFA survey emphasises compulsion concerns

Stakeholder pensions will be a flop unless compulsion is introduced, according to IFAs surveyed in Swiss Re Life& Health&#39s Life Insurance Report 2000.

The stark warning comes as advisers believe the success of stakeholder will be undermined by decision trees which are perceived as so complex they will hamper the low-earning target group from buying the pension, rather than encouraging take-up.

Swiss Re says its report demonstrates IFAs have strongly rejected the concept of decision trees but feel the advice needed by low-earners is financially out their of reach.

An unattributed group of IFAs is cited as saying: “The people to whom stakeholder is technically targeted do not have the money and we are not going to help them because it is a waste of time to do so. I wonder if they realise it is going to be a flop and it is just a precursor to making it compulsory.”

Stakeholder is also believed to be doomed because it grossly underestimates the need for advice.

The research shows a strong desire for face-to-face stakeholder advice, with 63 per cent of 1,027 consumers surveyed saying they prefer this advice channel over any other, including the phone.

The report details the findings of six discussion groups of 10 IFAs plus interviews with 20 senior life office officials.

Swiss Re says the report illustrates a widely held belief that compulsion is needed before stakeholder is taken up in the numbers wanted by the Government.

Swiss Re Life & Health communications manager Tony Worthington says: “The findings of the report seem to demonstrate the widely held industry belief that stakeholder will not succeed until compulsion is introduced.”