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Individual plans gain ground

In the race to get stakeholder pensions registered with Opra, individual plans are gaining ground over group schemes.

Opra and the Inland Revenue say 15 companies have applied to register stakeholder plans and five of these, Barclays, Britannic, NatWest Life, Norwich Union and Royal & Sun Alliance, have successfully had their individual stakeholder plans approved.

The only group stakeholder pension is the Prudential/TUC scheme.

The table below shows the group stakeholder-friendly products available. AIG Life is the latest addition this month, taking the number of products to 16. The number of individual stakeholder-friendly products has increased to 11, with AIG Life and HSBC Life entering the market.

One of the characteristics that stakeholder pensions must have is a nominated default investment option. However, seven of the group stakeholder-friendly products in the table do not.

For their default investment option, Equitable Life and Scottish Equitable offer a balanced lifestyle fund, Scottish Mutual&#39s product offers a growth fund, NU&#39s three products use its unitised with-profits fund and Friends Provident&#39s plan leaves it to the employer to choose. Abbey National&#39s product offers cautious, balanced and speculative funds and Clerical Med- ical&#39s product offers a balanced managed fund.

There are mixed views as to whether a nominated default option is a good thing. John Briggs, associate director at Chartwell Asset Management says: “You would not advise a 30-year-old to invest in a with-profits fund until he retires, you would initially suggest a more stockmarket-oriented fund for growth. There is no such thing as the perfect investment choice for everyone.”

On the other hand, Ian Buckle, head of individual pensions at NU, says: “For less financially sophisticated people the nominated default investment option would suit those that have no other investment preference. But not everyone has to accept it, it is their choice.”


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