Norwich Union now has a broad spread of stakeholder pensions with the introduction of Designer Pension @ Norwich Union.
Aimed at medium to large employers, Designer Pension is a group stakeholder pension that can be tailored to the needs of the employer.
Charges can vary from 0.5 per cent to 1 per cent, depending on the number of funds that the pension invests in, and the amount of commission taken. Employers can choose from up to 15 internal funds and 19 external funds from providers such as Deutsche, Invesco, Merrill Lynch and SocGen.
The default fund is Norwich Unions with-profits fund. Norwich Union is one of only four companies offering a with-profits fund in a stakeholder pension. The other three are CIS, Wesleyan and Standard Life. Very few companies offer a with-profits fund in a stakeholder pension because the cost of running it can take it over the one per cent charge cap.
The idea of a stakeholder pension which allows employers to choose the funds and other elements is not new and has been introduced by companies offering group stakeholder pensions such as Legal & General and Standard Life. Both of these companys products have similar features to Designer Pension. Standard Life offers the choice of up to 15 internal funds, while Legal & General offers 21 internal funds and 16 external, although it does not include a with-profits fund. Both companies also have charges that vary between 0.5 per cent to 1 per cent.
One disadvantage of the Norwich Union scheme is that it is only available online, which may limit the potential market to employers who can conduct their group pension on the Internet.
According to Standard & Poors, of the 15 internal Norwich Union funds that are available, two are first quartile, six are second quartile, five are third quartile and one is fourth quartile, based on £1,000 invested on a bid to bid basis with gross income reinvested over one year to May 21, 2001.