Skandia is ignoring the stakeholder bandwagon by introducing the MultiPension executive pension.
Skandia has decided not to enter the stakeholder pension fold as it feels that the one per cent maximum annual management charge is too restrictive for its customers. Instead it has brought out the MultiPension range to provide an alternative to stakeholder.
The MultiPension has been designed for investors who want a greater degree of fund choice than might be offered by the majority of stakeholder pensions.
The pension allows access to up to 222 funds from 28 different managers. These include Skandia, Threadneedle, HSBC, SocGen, Aberdeen, Fidelity and Schroder. Investors can pick up to 10 funds from this range initially, but they may increase the number of funds if they choose.
MultiPension has a base annual management charge of 0.75 per cent, with the average of the annual management charges of the chosen funds being added onto this. For example if an investor chooses the Skandia balanced fund with an annual management charge of 0.45 per cent and the Skandia index managed fund with an annual management charge of 0.2 per cent, this averages out to an annual management charge of 0.325 per cent added to 0.75 per cent.
Skandia is hoping to increase the number of funds available to 300 by the end of the year. Although this creates a confusing array of options for customers, Skandia is providing a software package called YouSelect which will gives comprehensive information on the risk levels and asset allocation of the funds. However YouSelect is not available in any other form and this may penalise investors and IFAs who do not have computer access.
Stakeholder pensions may be constrained by the one per cent charge, with the result that the types of funds on offer may be limited. For those who are prepared to pay more for their pension by way of charges, the Skandia MultiPension could prove attractive.
Skandia's decision not to enter the stakeholder market could pay off in the long term. The early years of the market could be a case of survival of the fittest as companies fight for market share.