Perpetual – Group Personal Pension Plan
Type: Group personal pension plan with choice of unit-linked funds.
Minimum group size: Four.
Minimum premium: £20 a month per member, £1,000 lump sum, £500 additional.
Minimum-maximum ages: 17-75.
Fund links: UK equity, overseas equity, global equity, fixed interest, cash.
Charges: Initial 0-5 per cent, annual – overseas equity 1-1.5 per cent, UK equity, global equity 0.75-1.25 per cent, fixed interest 0.5-1 per cent, cash 0-0.5 per cent.
Allocation rate: 100 per cent.
Minimum term: None.
Options: Lifestyle profile offering free monthly switching between funds, waiver of premium, free switching to Perpetual's stakeholder pension.
Commission: Intitial 0-5 per cent, renewal 0-0.5 per cent.
Tel: 01491 416416.
Bob Lawrence – Director, Duncan Clark
Ian Bird – Account executive, Adams Tingle Independent Financial Services
Stephen Buttal – Proprietor, Buttals Financial Services
Broker Ratings (ave. marks out of 10):-
Investment options: 5.3
Company's reputation: 7.0
Past performance: 6.6
Product literature: 8.0
Bird says: “It has entered a very crowded market full of insurance companies and banks. Perpetual is relying on its strong brand reputation for investment performance and its unique selling point. It is a brave and bold move for which it must be congratulated, However, it is a very difficult task.”
Commenting on the type of client for whom the plan is suitable, Buttal says: “I honestly don't know.” Lawrence identifies high-earning, sophisticated small groups of employees.
Bird says: “It is suitable for any client who is keen and able to use the onsite electronic data system. This is fine in theory but in practice there are currently a large number of clients who are not able to do this. Perpetual is missing a noticeable part of the market.”
Moving on to the marketing opportunities the product is likely to provide, Buttal is dismi ssive and feels there are none.
Bird says: “We would have to focus on performance, less so on charges. Pensions are at the end of the day a long-term investment product with tax advantages. Investment is the key.”
Lawrence believes it is a useful group personal pension plan for high earners.
Discussing the useful features and strong points of the plan, Lawrence says: “It has a very clear charging structure and has flexible contributions. The charges are reasonably competitive and the waiver of benefit and lifestyle options are also competitively priced.”
Bird mentions the fund performance and application forms. He adds: “The contribution protection is very good in that it can be medical-free under certain criteria.”
But Buttal is not impressed. He says: “Simplicity and transparency but that is about it.”
Next, the panel consider the range of investment options. Lawrence is out on a limb. He says: “It is excellent. It has a very wide range of funds from a highly respected investment house.”
But Bird takes the opposite view. He says: “It is very limited. However, the options do cover most of the average member's requirements. Only the most sophisticated would require more choice.”
Buttal says: “It is very poor, especially when compared to its competitors' ranges and even Perpetual's own range of unit trusts.”
Moving on to the drawbacks of the product, Buttal identifies a lack of fund choices. He also feels it has uncompetitive charges compared with stakeholder-friendly plans.
Bird says: “There is no indemnity-type initial commission so that may put off many IFAs. It has a limited fund choice and the contribution protection is quite expensive. There is no self-invested personal pension or drawdown option at the moment and the annual management charge is very expensive.”
Lawrence says: “It is not stakeholder-compatible yet. There is no life cover option and it misses out on pre-stakeholder opportunity. There is no with-profits fund either.”
Assessing how flexible the product is, Lawrence says: “It is excellent – very flexible although this is a prerequisite of any millennium group personal pension plan.”
Buttal says: “It is good but so is the flexibility on all the other plans being launched.”
Moving on to Perpetual's reputation, Lawrence thinks it is excellent.
Buttal says: “It used to be excellent but its fund performance over the short term has left it a little tarnished.”
Bird backs up this view. He says: “It is very strong. How ever, it took a big knock with the bad publicity surrounding its poor performance from mid-1999 to March 2000. I feel other companies – Investec and Jupiter, in particular – have leapfrogged over it in the past two or three years.”
Bird thinks Perpetual has got too big and its best funds tend to be the smaller ones.
Asked for their views on Perpetual's past performance record, the panel are split. Buttal says: “It is fairly mediocre, I am afraid.”
Lawrence thinks it is very good. Bird says: “It is very good except for the period between mid-1999 to March 2000.”
Commenting on which companies are most likely to provide the main competition for the product, Buttal cites Standard Life, Norwich Union and Friends Provident.
Bird says: “Any plan offering external fund links, for example, Scottish Widows, Skandia and Scottish Life. However, I can see that all group personal pensions and stakeholder plans will offer fund links to investment houses very shortly.”
Lawrence suggests all the major GPP providers including Standard Life, Scottish Equitable, Scottish Widows, Norwich Union, Axa Sun Life, Friends Provident and Clerical Medical.
Examining whether the charges are fair and reasonable, Buttal says: “A year ago, it would have been good but now it has been overtaken by companies offering stakeholder terms.”
Bird says: “The annual management charge is very high, otherwise the charges are OK.”
Lawrence thinks the charges are too high for bigger pension schemes in the current environment.
Turning to the commission, Buttal says: “It is a problem. If you take full com mission, it is fair but then the charges are uncompetitive. If you take reduced commission to red uce the charges, the commission is not worth having.”
Bird says: “The commission terms are directly related to the charges. Whether it is fair and reasonable depends on the adviser's agreement with a client.”
Lawrence says: “Yes, it is fair but there is no indemnity.”
Looking at the product literature, Lawrence thinks it is very good.
Bird says: “The IFA examples are excellent. Employee and employer guides are very smart and professional but contain lots of small text. It means it is very laborious to read after two or three pages. The video that comes with the literature is a bit gimmicky. It has no real benefit for the IFA, employee or employer.”
Buttal says: “It is good, clear and simple.”
Summing up, the panel feel the timing is wrong for the product. Buttal says: “This plan would have been excellent two years ago but it is now being left behind by those bigger companies that are going for the stakeholder market and which are offering unbelievably good terms. Has Perpetual got the financial strength to compete with Standard Life and Norwich Union?”
Lawrence concludes: “It may have come too late bearing in mind the current charging structures and com mission available in the market. However, it will find a niche among high-earning groups.”
Perpetual – Group Personal Pension Plan