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Product matters

The bulk buyout market is attracting the attention of most big players in the pensions market and, fuelled by Opra&#39s assessment that there are up to 30,000 occupational schemes currently in wind-up, Clerical Medical is no exception.

Arguably, there are three keys to success in this market which are: charges, fund links and the ability to accept/ process data.

Clerical Medical appears to have addressed these with a single annual management charge, an extended range of fund links (including lifestyle switching) and a fully automated process for quotes and applications.

There is a standard 100 per cent allocation rate with no penalties on transfer or early retirement, which means that planholders can move their funds quickly and easily in the future, where appropriate.

Scheme-specific terms will enable big buyout cases to benefit from economies of scale while smaller cases will undoubtedly be faced with the inevitable commercial underwriting approach that Clerical Medical will need to adopt to complete business cost-effectively.

A fully automated process is vital to the commercial success for the provider and the adviser, not to mention the client. IFAs have a choice of commission options and that is a useful tool in the negotiation process.

A big convenience factor for advisers is to be able to place the replacement scheme with the same provider who has the buyout. This may be a minus for Clerical until such time as it re-enters the group stakeholder market.

Bob Perkins is senior technical consultant at Momentum Financial Services


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