Scottish Widows is introducing a stakeholder pension that gives investors access to 17 funds, including three external funds from April 6, 2001.
The stakeholder pension plan has an annual management charge of one per cent, for whichever funds investors choose. Investors can select both active and passive funds managed by Scottish Widows or externally managed funds from Newton, Merrill Lynch and Schroder.
The stakeholder pension also caters for investors with ethical concerns, by providing access to its environmental fund. This invests in UK companies that are committed to protecting the environment. Where the investor has no fund preference, the consensus mixed fund is used as the default investment option. This fund invests in a range of index-tracking funds that invest in the UK and overseas. Investors also have the option to preserve the fund value by gradually switching to the cash fund during the three years before retirement.
The diversity of funds available for a single one per cent charge is the pensions main attractive feature. But there is likely to be intense competition between product providers for stakeholder business.
According to Standard & Poors the Scottish Widows consensus mixed fund is ranked 118 out of 193 funds based on £1,000 invested on a bid to bid basis with net income reinvested over one year to January 1, 2001.