Skandia has included an executive personal pension plan in its new range of single-priced pensions.
The single charge pension range is Skandia's answer to stakeholder and its influence on the charging structures of other pension contracts. IFAs have found it difficult to provide advice within the 1 per cent framework, but Skandia's single charge pension range allows the annual management charge to exceed 1 per cent to pay for advice.
Skandia believes changes within the pension market, including the Government pension reviews and depolarisation, will lead to an increased need for independent advice.
The annual management charge on the series six single price executive personal pension is separated into three strands - the pension wrapper, the underlying funds and commission - so investors can see clearly what they are being charged for. It differs from Skandia's existing executive personal pension in that it has no initial charge and the annual management charge can go up to 1.75 per cent, excluding charges on the underlying funds.
Skandia did not enter the stakeholder market because it felt the maximum 1 per cent charge was not compatible with its multi-manager fund links. But Bob Perkins, senior technical consultant IFA Momentum Financial Services, points out that other providers now offer external fund links within single-charge contracts and he believes Skandia is keen to increase its share of the pensions market by offering this type of charging structure.
Perkins thinks Skandia has targeted the market in a clever way as the onus is on the adviser to provide added value when negotiating commission arrangements with their clients. However, he says it may be difficult for advisers to demonstrate they are providing added value when their commission arrangements take the annual charge beyond 1 per cent. For this reason, he believes Skandia's initial charge executive personal pension will still be popular with some advisers.