View more on these topics

Life offices in stakeholder price war

Life offices have launched into a bloody stakeholder pension price war which has seen annual management charges plummeting below the Government&#39s 1 per cent cap.

Legal & General and Friends Provident have kicked off with aggressively priced “stakeholder friendly” group schemes with annual management charges as low as 0.65 per cent.

While Scottish Mutual&#39s Universal group plan, with an AMC of 1 per cent, includes the facility for 0.2 per cent IFA commission.

Their moves come despite howls of protest from the life industry over the charge cap which companies claimed was too low for them to make a profit.

Friends Provident head of corporate pensions business development Paul Stanbridge says it is capable of offering schemes with AMCs as low as 0.55 per cent.

But he admits this is dependent upon whether commission is paid, the size of the premiums and the number of scheme members.

Stanbridge says: “It is an aggressive stance, but we have looked at every aspect of our business in order to cut costs, from sales and marketing through to administration and regulatory requirements.

“Our fund managers are now working on a 10 to 15 points basis.”

But the aggressive price cutting has come under attack from other life offices who claim the companies involved run the risk of opening the door to even more aggressively priced competitors from abroad.

Norwich Union pensions marketing manager Iain Oliver says: “Companies relying upon cost alone is leaving them vulnerable to predators.”

Oliver believes companies need to give customers something extra if they want and to develop loyalty.

Pension providers have united in calling for the Government to clarify the issue of stakeholder advice, believing the whole issue is too complicated to be explained through its preferred decision trees.

Oliver says: “We believe they are too complicated and are a recipe for disaster.”

Scottish Equitable pensions development manager Steven Cameron says: “The use of decision trees for advice is far to simplistic. How do you explain contracting out?.”


Investment call for action to avoid crisis

The UK&#39s fund management industry faces a bleak future unless it adapts quickly to the needs of the global market, according to the Fund Managers&#39 Association.A new FMA report reveals half of the 77 asset managers that control nearly 90 per cent of the funds under management in Britain, are staffed by executives who have […]

Nationwide first to drop rates

The Nationwide raised its mortgage rate on Friday, becoming the first to do so after Thursday&#39s rate rise.The society will raise its standard variable mortgage rate by 0.25 per cent to 6.95 per cent from 1 February.The move by Nationwide is expected to be followed by most of the other lenders after the Bank of […]

Fears over Jupiter fund

Several leading investment IFAs are to suspend recommending Jupiter&#39s Income Trust in the wake of star manager William Littlewood&#39s decision to take a sabbatical.They say they are “unsettled” by the announcement and are not convinced Littlewood will return at the end of March. The timing of the announcement has also surprised many in the industry […]

Old Mutual swoop on stockbroker

South African life office Old Mutual is in £540m takeover talks with finance group Gerrard.Shares in Gerrard, who own stockbrokers Greig Middleton, jumped by10 per cent when the news was announced at the end of last week.Old Mutual says the move is consistent with its acquisition strategy reported last July prior to its London Stock […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm