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Resolutions and roses

The Resolution saga continues with analysts predicting that failed bidders Standard Life and Friends Provident are now prime takeover targets themselves.

Meanwhile, Pearl is acting like the cat that got the cream even though Resolution is still only in talks with Pearl and has not recommended its offer to the Board yet.

After Standard Life withdrew its offer and admitted defeat on Monday, analysts immediately began speculating on the long-term future of the life office.

Standard’s unsuccessful attempt for Resolution and its move away from its organic growth strategy raises serious questions about its senior management, says Blue Planet Investment Management assistant investment manager Harish Haridas.

And yesterday, the news of Friends Provident group chief executive Philip Moore’s resignation did nothing to allay commentators’ fears that the firm has lost its way.

Highclere Financial Services partner Alan Lakey says: “I don’t think Friends has a long term future. It seems to have lost its way and I can’t understand its strategy. I always thought when Friends demutualised a few years back it wasn’t a long-term thing because, on the world stage, the company is quite small. Whether right or wrong only large companies with economies of scale survive on the world stage.”

While Collins Stewart analyst Tim Young believes a deal for Friends could be imminent, pointing to Old Mutual, Axa and Zurich as potential bidders.

Young says: “Its stock is very low, there is plenty of value to be had and plenty of suitors around.”

On the pensions front, the Pensions Policy Institute has called on the Government to introduce a “pension income disregard” to overcome the disincentive to save in personal accounts created by means-testing.

A report by the PPI commissioned by BC&E Benefit Schemes, suggests disregarding the first £12 a week of private pensions income in calculating entitlement to means-tested benefits.

On the face of it, it looks as though this might be a viable solution to the issue of means-testing which is the biggest thorn in the side of personal accounts at present.

PPI research director Chris Curry says the disregard would increase Government expenditure on means-tested benefits for pensioners by around 4 per cent in 2012.

He says that all the people at the highest risk of losing out under the current proposed system of personal accounts are highly likely to be better off under the disregard system than if they were not saving at all.

It will be interesting to hear the Government’s response to this idea as so far they have remained tight-lipped on the issue, simply saying they are aware of it.

On the less positive side of pensions news, the UK’s state pension system has been rated the worst in Europe for the second year running, by Aon Consulting.

An average earner retiring this year would receive a pension worth 17 per cent of their salary compared with an EU average of 57 per cent.

The report makes for pretty gloomy reading but Pensions Minister Mike O’Brien says: “It is misleading to view the state pension in isolation. The UK pensions system is different from other European countries, and ranked fifth overall in the survey.

“In recent years several European countries have had to make their state provision less generous to ensure long-term affordability; in the UK we are reforming the system to make State Pension simpler, fairer for women and carers, and more generous – whilst remaining affordable.

“Proposals in the next Pensions Bill, later this year, will make it easier for millions of people to save to meet their retirement aspirations through automatic enrolment into a qualifying workplace scheme or personal accounts.”

And finally, the founders of retirement specialist advisory firm Wentworth Rose are reuniting to set up an IFA business which will focus on wrap and pension advice.

Headed up by Wentworth Rose founder Philip Rose, the new advisory firm called Chandos Rose will be officially launching in the first quarter of next year.

Former Wentworth Rose directors Ray Peyre, Mark Chandler and Malcolm Thomas are also involved in the venture.

The firm aims to recruit 12 to 15 specialist pension consultants over the next nine months.

Rose says: “We aim to have a small team but with very high levels of support – total IT support, paraplanners, efficient administration and so on. We are aiming for what I call the marzipan layer of clients with £200,000 to £2m to invest.”

Please email me at Nicola.York@centaur.co.uk if you have any thoughts on this piece.

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