AIG Life – Personal Pension
Type: Individual personal pension
Minimum premium: Lump sum £3,500
Minimum-maximum ages: From birth - 74
Fund links: Choice of 15 funds from AIG Life, Aberdeen Asset Management, ABN Amro, Artemis, Barings, Cazenove, Credit Suisse, DWS, Exeter Fund Managers, First State, Fidelity, Framlington, Gartmore, Global Asset Management, Henderson, Invesco, Investec, JPMorgan Asset Management, Jupiter, Legg Mason, Liontrust, Merrill Lynch, M&G, Newton, Odey, Old Mutual, Schroders and Threadneedle
Charges: Initial 5%, annual 1%
Allocation rates: Enhanced allocation option - 98-110%, regular bonus option - 99%
Minimum term: One day
Options: Regular bonus option - loyalty bonus of 0.3% of fund value payable every third policy anniversary
Commission: Initial 5.5%, initial 2.75%, renewal 0.15% or renewal 0.3%
Tel: 0800 413978
Martin Dilke-Wing, Director, Morgans Independent Advisers
Keith Jarman, Director, Hughes Carne IFA
Jeremy Parrott, Managing director, Birnbeck Finance
Steve Perdisatt, Research manager, Burns Anderson
Anton Robinson, Director, City Asset Management
Investment options 8.2
Company's reputation 6.2
Past performance 6.8
Product literature 7.0
AIG Life has introduced a unit-linked personal pension that gives access to funds from 27 external fund managers.
Looking at how the product fits into the market, Dilke-Wing says: "The plans market would appear to be the transfer, SIPP and single premium markets." Jarman feels AIG has joined the bandwagon of providers offering external fund links, self-investment and phased drawdown all in one plan. Parrott thinks the plan fits into the market very well and contains all of the features, which he would expect to see from a Sipp. Perdisatt and Robinson feel this particular market is somewhat over crowded.
Turning to the type of client the plan is suitable for, Dilke-Wing feels the plan is arguably suitable for clients with single premiums to invest with an interest in a wide range of fund management groups or guaranteed funds and have a reasonable good idea of when they want to retire. Robinson says the more sophisticated and active investor.
Perdisatt thinks the plan would be suitable for wealthier clients with substantial single premiums to invest. Transfers in possibly for phased retirement or drawdown, although charges impact in this latter area. Parrott says: "It is most suited for those who are paying reasonable levels of premium to their pensions and those who have access to sizeable transfer options."
Analysing the marketing opportunities the plan will provide, Dilke-Wing, Robinson and Perdisatt think the plan will not provide any marketing opportunities. Jarman says: "The plan offers a good alternative to the market seriously dominated by Skandia and Winterthur. But it is now competing in a market where new players seem to join on a daily basis." Parrott feels the plans add to the choice available to clients and may well suit a number of clients.
Highlighting the main useful features and strong points the panel list the fund choice and range, Sipp options, guaranteed and protected funds, and the full range of member directed investments.
Discussing the investment options Dilke-Wing says: "The range of investment options is strong as the plan provides access to a wide range of external managers, a fund of fund approach and structured products. But, these options do not appear to come cheap." Jarman says: "Off the shelf, not bad but could be broadened, and no doubt will be and with the Sipp option the sky's the limit."
Parrott says: "Excellent. Wider links to leading external fund managers add to the attraction. Finally with the option of member directed investments in such areas as shares and property, the plan has covered most bases." Robinson and Perdisatt think the range of investment option is good.
Turning to the plan's disadvantages, Jarman points to the fairly high minimum initial premium, the lack of a monthly premium option and limitations on protected rights money. Robinson sees the enhanced allocation option as a drawback. Perdisatt says: "I believe the plan only works for substantial levels of contributions. Not much point going in with £3,500. The charges are fairly high, and particularly so where external funds in the Sipp facility is used."
Dilke-Wing says: "It's a bit of a dog's dinner. It covers all the styles, in all the colours and all the sizes but all of them are just that little bit too expensive. The absence of a regular premium facility is a distinct disadvantage." Parrott thinks there are very few disadvantage.
Looking at the flexibility offered, Parrott feels the flexibility offered is generally very good. All preferred Sipp features are covered including drawdown and phased retirement options. Investment flexibility is particularly good for an insurance company Sipp. Robinson thinks that it is better than most. Perdisatt says: "Reasonable for a plan of this type. The choice of charging structure has some merit, as does the free fund switch facility. The Sipp option is useful but somewhat expensive under the full Sipp option."
Dilke-Wing says: "The flexibility in the fact that the company offers high allocation, level allocation with loyalty bonuses, SIPP options and external fund management access is undeniably comprehensive. The problem is that whilst it offers all these facilities, on first glance it does not appear to be compelling in any one area." Jarman thinks flexibility is essential. "This plan offers enough to keep 90 per cent of clients happy," he says.
Evaluating the company's reputation the panel agree AIG is mainly known in the UK for it's guaranteed and protected funds and not know for pensions.
Considering AIG's past performance Dilke-Wing says AIG has built its fund performance reputation largely on the back of guaranteed, limited participation, equity index products. The performance of managers over the last three years means that these look OK. The multi manager options and fund of fund options mean that AIG's past performance will lose relevance. Jarman says: "AIG's reputation on performance has been set by the fund links they have had. I could not find an AIG fund not associated with another investment house. AIG doesn't have its own reputation."
Identifying the plans main competition the panel list Scottish Life, Scottish Equitable, Skandia, Winterthur, Scottish Widows, Merchant Investors, Standard Life, Norwich Union and other Sipp providers.
Assessing the charges Parrott thinks they are about average. Dilke-Wing says: "They are too expensive and not competitive with the mono charged contract world there is a bid offer spread and AIG's annual management charge of 1 per cent is also expensive, especially given the spread.
Moving on to the commission payable the panel think the commission is on the high side. Perdisatt says: "The initial commission costs are reflected in the rather high charges on the plan. The commission sacrifice option has some merit."
Looking at the product literature Jarman thinks the literature is nicely presented, concise, a touch of quality and easy to read. He says: "Please change the application form the yellow is awful." Robinson says: "Easy to lose as it's mostly loose leaf, apart from that pretty good. Parrott and Perdisatt think the literature is clear and concise.
Summing up Parrott says: "Overall, I think AIG have made a good effort and produced an attractive Sipp alternative. I do, though, wish it had ignored the enhanced allocations as an option, it counts for little in real terms and overly complicates an otherwise attractive Sipp."