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IFAs see compulsory pensions in 4 years

Pensions will be made compulsory by 2005 because of the failure of

stakeholder, according to IFA delegates at the stakeholder thinktank.

Delegates were cynical about whether the low-cost money-purchase schemes

would successfully attract savers at the lower end of the market into

taking out pensions.

They believed as a result the Government will introduce compulsion after

the next two general elections.

Many analysts have suggested compulsion will be on the Government

agenda after the next general election, widely tipped to take place in

spring next year.

But IFAs believe Labour would view this as too much of a political risk

and will delay any decision until the following general election, if they

are elected for a third time, because compulsory pensions may be viewed as

an addit- ional taxation.

IFAs believe the Government intended stakeholder to be a product that represents such good value for money it would attract the previously unpensioned lower end of the market.

But brokers remain unconvinced that a controlled product would bring about

unprecedented take-up levels at the lower end of the market.

They say the only way to reach the stakeholder target market of

individuals earning between £9,000 and £20,000 is through


Delegates were also cynical about decision trees andthe Government&#39s “DIY”

approach to pensions, arguing that this too could set the scene for low


One IFA said: “I have never seen people queue up to buy an investment

product. They have to be bought, not sold.”

The thinktank also provided an opportunity for intermediaries to

brainstorm on how they would profit from the post-stakeholder market.

Some believed stakeholder would prove profitable as a platform on which to

sell “spin-off products” such as private medical insurance and income


Others suggested the role of IFAs may adapt so it is not necessary to sell

stakeholder but to advise corporate clients on their legal duties under the

new regime.


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