Flexible Pension Plan
Individual personal pension with insured and self-invested options
Insured option - £20 a month, £200 a year, lump sum/transfers £2,500. Self-invested option - Lump sum £2,500
Insured option - choice of 40 internally managed funds and 26 externally managed funds from Baillie Gifford, DWS, First State, Invesco Perpetual, Lazard, Merrill Lynch, Newton, Northern Trust, SocGen and UBS. Self-invested option - choice of 550 funds from 28 fund management groups via fund supermarket and all other Inland Revenue permitted investments including commercial property
Defined lifestyle option moving into lower-risk investments as retirement approaches
Establishment charge up to 0.5% a month for five years, annual 1%, external funds annual up to 0.55% depending on fund, additional charges for self-invested option
Menu based on establishment charge - lump sum investments/transfers - initial up to 7%, fund-based up to 0.5%, annual/monthly contributions - initial up to 115% of Lautro, initial up to 100% of Lautro plus 2.5% renewal, initial up to 90% of Lautro plus 0.1% fund-based, fund-based up to 0.55%
0845 610 0061
Scottish Equitable's flexible pension plan combines an insured personal pension with a self-invested personal pension and offers a commission menu to IFAs.
Independent Personal Financial Management proprietor Luke Gibbon feels this tries to offer something for everyone but in doing so it becomes complex and potentially expensive.
He says: “The product has an establishment fee payable over five years which is applicable to both single premium and regular contributions. A penalty is applied if funds are transferred away during the establishment period. Charges are difficult to assess, because while the literature states the annual charges for in-house funds, it does not give an indication of the cost of external fund managers.”
Overall, Gibbon feels that the product runs against the trend for simplification as it mixes up different charges and penalties. He points out that there are an array of commission options including renewal and a small fund-based option. He regards the maximum commission levels as higher than the industry norm but complains that the menu approach adds to the product's complexity.
According to Gibbon, the investment choice is the product's best feature. He says: “The plan offers a wide range of investment funds. These include Scottish Equitable's own funds, access to the funds of 10 investment partners, a new fund supermarket and a self-invested option. Consequently, from an investment point of view, it is extremely flexible.” He also likes the bonuses which are added at the end of 10 years and annually thereafter but points out that these are not guaranteed.
Gibbon finds the literature difficult to follow and believes it could be simplified to make it more client-friendly. He expects competition will come from other provides that offer in-house funds and external fund links. He also suggests Sipp providers as potential competitors.
Suitability to market: Average
Adviser remuneration: Good