Scottish Widows is the latest company to bring in a range of pre-stakeholder pensions.Group Pension Solutions
The new group personal pension, group money purchase and group additional voluntary contribution schemes fit the stakeholder criteria, except they will have an annual management charge of between 0.65 per cent and 1.5 per cent.
They also allow access to the funds of seven external managers, Fidelity, Fleming, Gartmore, Mercury, Newton, Perpetual and Schroders.
Scottish Widows is aiming the products at firms who are looking for a group arrangement for their employees that will be exempt from the stakeholder regime being introduced in April 2001. A scheme can be exempt from stakeholder if the employer pays the equivalent of three per cent of its employees' salaries into the scheme and there are no exit penalties. By choosing one of these options now the company will not have to change it to a stakeholder scheme later.
Stakeholder pensions will be inexpensive products but this could also lead to inflexibility in terms of narrow investment choice owing to lower charges. By giving the annual charge on these products some extra range, and allowing access to external fund managers, this problem may be overcome.