At last, Norwich Union, one of the major supporters of stakeholder pensions, has effectively admitted that SHPs are not commercially viable. Rather than tell the government the 'facts of life' and dump stakeholders, its solution for the future is to cross-subsidise the distribution of stakeholders with non-charge-capped pensions.
It is indefensible that one customer should, effectively, be required to pay part of another customer's contribution.
Norwich Union, Legal & General and one or two other significant players were instrumental in allowing this cynical, incompetent, dishonest Government to bully the industry towards commercial suicide. If they had taken a stand against Government interference, there might still be some confidence in pensions.
The financial services industry is now being dictated to by civil servants and other Government officials. They squander vast sums of money but are totally unaccountable for their mistakes and inefficiencies. Yet they have the effrontery to dictate the maximum product charges which can be applied without regard to the production, running and distribution costs borne by the provider.
The fact is, if Norwich Union were now to double, treble or quadruple its commission payments, I would continue to tell my clients the truth as I see it. In my view, the majority of standard rate taxpayers should avoid making voluntary contributions into pensions.
Having experienced the stakeholder, this is surely the time for the industry to refuse to sell Sandler products.
William J Wells