Prudential is the first life office to declare its intention publicly to launch a product which will adhere to the Sandler standards, including the 1.5 per cent price cap.
The company, which unlike many of its rivals claims the new price cap is workable, says it will introduce a new-style with-profits offering in the third quarter of this year which will stick to the Sandler spec-ifications.
It will be aimed at IFAs' clients rather than the target market for Sandler, with the Pru saying its low expense ratio allows it to continue paying “compet-itive commission levels”.
Pru UK chief executive Mark Wood says the charging structure will serve as a bonus to IFAs as they will be able to use it as part of their sales pitch to prospective clients.
The smoothed managed fund will fit into the medium-term savings product envisaged by the Sandler report, positioned between a short-term deposit-based account and the revised stakeholder pension.
Wood says: “I think that the price cap is right, the Government has thought long and hard about this. We will launch a product over the summer within the price cap targeted not to the Sandler market but fitting within the Sandler standards.”
John Scott & Partners investment manager Patrick Connelly says: “The reasoning makes sense for the Prudential. With-profits was and still is an incredibly important part of its business. It has been looking around for something to replace the inflows of with-profits business.”