View more on these topics

Stakeholder is a lousy deal

I was very dismayed to read your leader of October 18. In my view this is precisely the sort of thing that gives the industry a bad name.

I eschew stakeholder in its intended form for a very simple reason – it is a lousy deal for the target market.

We all know it trips over the minimum income guarantee, that the pension credit is in effect a 40 per cent tax.

Then there is the issue of how much the policyholder will have to contribute to make any pension, let alone a stakeholder, worthwhile.

Why should firms, who are under enough pressure already, succumb to what is in effect further taxation by contributing to a stakeholder pension?

Much of this was in fact pointed out by Tim Wilsdon on the very next page in the same issue in his excellent analysis. What about some real Government incentive – give back the tax you are taking on the funds.

Those who are in greatest need of a pension probably have, by definition, a shorter lifespan. As Stuart Ritchie has so ably pointed out, what will happen when they get to retirement with their small fund? Buy a “crap” annuity which will probably not last very long?

What other products do they not have which may be of more relevance and immediate importance to them (life cover, ASU)?

Perhaps the idea of no proof of income up to £2,808 is not so much to encourage those with no money to find what they have not got to put into a pension, but rather “tag” those in the black economy for a Revenue investigation?

Stakeholder is a pretty good product for those who save anyway. Company directors and the better off have many benefits under stakeholder.

Commission is not an issue. They invariably either pay fees or place considerable volumes of other classes of business to enable stakeholder for them to be a “loss leader”.

All these issues seem to be conveniently swept under the carpet and all will be made well with increased sales drives underpinned by better commission.

A lousy deal is a lousy deal, no matter what commission the adviser is paid. Are you surprised we get a bad press?

Harry Katz

Norwest Consultants, Stanmore, Middlesex


Support US disaster fund

IFA Redcliffe Associates managing director Tony Gordon is calling for the UK financial services industry to lend its support to those affected by the September 11 terrorist attacks on the US.The IFA is attempting to rally support from the financial services community following the tragic events in which around 100 British employees of financial services […]

Sun Bank cuts rates

Sun Bank is reducing interest rates across its mortgage products in response to the lowest bank base rates since 1963.Flexible mortgages with a discount to July 1, 2002 are now at 3.99 per cent. Fixed rates of 3.99 per cent are available to January 1, 2004. Other rates apply for different terms.Discounted variable rates are […]

L&G adds Dresdner RCM Global investors to panel

Legal & General is adding Dresdner RCM Global Investors to its panel of external pension fund managers.The move will result in two new fund choices becoming available, the Dresdner RCM Exempt Global Equity Fund and the Dresdner RCM Exempt UK Equity Fund.L&G head of retail pensions Randle Williams says: “These two new funds increase the […]

Pink Home Loans – The Chameleon Mortgage 60 Per Cent

Tuesday, October 30, 2001.Type: Tracker mortgage.Tracker term: Term of loan.Tracker rate: Bank of England base rate plus 2.75 per cent.Minimum loan: £25,001.Maximum loan: Up to 60 per cent of valuation subject to a maximum of £1m.Income multiples: 3.5 times principal income plus second or three times joint.Arrangement fee: £395.Redemption fee: 6 per cent of amount […]

Converting pension savings to a retirement income…

Since last year’s reforms to pension legislation, a significant number of retirees have chosen income drawdown over purchasing an annuity. Income drawdown is more flexible than an annuity. However, it also increases the likelihood that individuals won’t be able to maintain their income throughout their lifetime. In this short video, we explain the risks that […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm