Type: Unsecured personal pension
Minimum investment: Lump sum £10,000 provided at least £50,000 is already invested in the Retirement Planning element of the plan, £37,500 for transfers from other drawdown plans, monthly £200 or £50 if at least £10,000 already invested
Minimum-maximum ages: 50-74
Investment choice: Scottish Widows pension fund range of 37 internally managed and 26 externally managed pension funds from eight fund management groups, 1,000 funds through fund supermarket, choice of four discretionary fund managers, commercial property
Income frequency: Monthly, yearly, single and transfer payments
Charges: Service charge 0.1-0.7% a year depending on value of investment, investment charges – Scottish Widows pension fund range 0.1-1.1% a year depending on fund, fund supermarket range 0.1-2% a year depending on fund, discretionary fund managers 0.5-0.8 % a year depending on manager and amount invested plus additional charges for underlying investments, commercial property management charge 0.1-1.25% a year plus additional costs
Commission: Subject to negotiation between adviser and client
Scottish Widows has added an unsecured personal pension option to its retirement account, This enables investors in the self-invested personal pension to accumulate money for their retirement through the retirement planning element and draw down an income within one product.
IPFM director Luke Gibbon says: “This is one of a number of new pensions being launched mainly because of the misnamed pensions simplification legislation and, to a degree, the treating customers fairly regime.
“It is a personal pension, which can be used as a self-invested personal pension and a drawdown plan. The plan will accept both protected rights and non-protected rights funds.”
Gibbon observes that the plan potentially has three charges. “First there is a service charge, which ranges from 0.7 per cent a year for funds up to £10,000 down to 0.1 per cent for funds over £2m. The second charge is an investment charge, which will depend on where the funds are invested, and the third charge is the adviser’s remuneration.”
He draws attention to the fact that the plan offers a wide range of investment funds and also has links to the Fidelity Funds Supermarket as well as a full Sipp option.
“The attraction of the plan is that it is very flexible and clearly there is no necessity in changing the policy when benefits are taken. I do, however, have some concerns.
“When stakeholder plans were introduced, one of the attractions in my opinion was the simple charging structure that replaced the plethora of charges that had previously applied to pensions. It appears that we are slowly creeping back to having a number of charges that makes it more difficult to compare plans.”
He adds that the minimum monthly premium is £200 a month, which will exclude a number of potential customers. The minimum reduces to £50 if £10,000 is invested in the plan. “This could also result in the total cost to the client increasing,” he says.
With regard to the competition, Gibbon says a number of companies are re-launching their pensions, which advisers will need to judge. “Undoubtedly costs will be an issue, but as the pensions become more sophisticated there is a greater risk that administration systems will not work properly. I think service will be a significant issue,” he says.
Investment choice: Good
Adviser Remuneration: Average