Standard Life – Group Personal Pension Flex
Type: Group personal pension
Minimum premium: £6,000 a year a scheme
Minimum group size: 5
Minimum-maximum ages: 1 - 75
Fund links: Sterling one, fixed interest one, index linked one, property one, protection one, structured one, managed one, ethical one, stock exchange one, international one, European one, Japanese one, North American one, Pacific Basin one, UK equity one, FTSE tracker one, Far East one, Standard Life global selector, Standard Life UK smaller companies, Deutsche managed portfolio, JP Morgan Fleming life moderate, UBS life managed, Deutsche Asset Management balanced, Baillie Gifford managed pension, Newton exempt global balanced, Newton managed, Gartmore European selected opportunities, Threadneedle American select growth, Fidelity special situations, Fidelity South East Asia, JP Morgan Fleming life global 70:30 equity
Charges: Annual up to 2% up to £24,999, up to 1.9% £25,000 – £49,999, up to 1.8% £50,000 and above
Allocation rates: 100%
Minimum term: Single premiums two months, regular premiums two years
Commission: Level 2.5%, renewal 0.2%
Tel: 0131 225 2552
Gillian Colsell, IFA, Capital Planning UK, John Bumford, client manager, Gee & Co, Luke Gibbon, proprietor, Independent Personal Financial Management, Kevin Coleman, IFA, Park Row Associates, Ian Anderson, director, Silvesters
Company's reputation 7.6
Past performance 6.2
Product literature 6.4
Standard Life has introduced group personal pension flex, a group personal pension which can invest in 17 Standard Life funds and the funds of 8 external fund managers.
The panel comment first on how the plan fits into the market. Colsell thinks it is a well-positioned, flexible, low-cost product from a highly respected provider. Gibbon says: "The plan is effectively a stakeholder plan that will allow use of external fund managers at an additional cost."
Coleman says: "As an alternative to offering a stakeholder plan a company can offer a GPP with an employee contribution of 3 per cent of salary. This plan offers this and a wide range of options within it." Anderson reckons that as an off-the-shelf GPP it is not alone, there are a number of products on the shelf already.
Bumford says: "Looking to the future, the pensions industry needs to rebuild its tarnished reputation and to do this using simple, transparent products that can be easily understood at all levels. This plan goes a long way to achieving these goals and will quickly become a core product for advisers who are active in the GPP market."
Identifying for whom the plan might be suitable, Gibbon thinks any company, although large companies might find it more efficient to develop their own schemes. Colsell says: "Owing to the simplicity and clear literature it would suit small companies with less expertise as well as the larger corporations."
Anderson suggests employers looking to provide more than a phantom stakeholder and Coleman thinks it would be useful for companies who are also willing to contribute on behalf of employees, and small or medium sized companies wishing to keep their administration costs to a minimum. Bumford also suggests small and medium sized companies.
Commenting on the marketing opportunities the plan will provide, Gibbon and Anderson thinks it doesn't offer anything new. Colsell believes it might give access to other aspects of financial planning and investments, the latter as a result of the quality of the outside funds. Coleman says it could offer a non-stakeholder flexible arrangement with stakeholder-type charges. Bumford thinks the simple transparent structure will help advisers dispel the fears that pensions are complex.
Turning to the main useful features and strong points of the plan, Gibbon says: "As an adviser, the most important feature is that the funds can be transferred out without penalty. This provides complete flexibility if the charges and/or the funds become uncompetitive in the future. I also like the flexibility of allowing employee contributions to be paid by the employer or employee." Bumford mentions the low minimum premiums and the single charge structure.
Coleman suggests the contracting out and pension contribution insurance. Colsell and Anderson favour the simplicity, flexibility, portability, investment choice and the automated investment switch facility into lower risk investments near retirement.
Assessing the range of options available Gibbon says: "The choice of external fund managers appears to be limited and could be a deciding factor in whether to use this or another plan. In all other respects the options are pretty much standard." Coleman thinks the options are comprehensive although it does not provide additional life assurance.
Bumford says: "The in-house investment options will meet most requirements for operating a successful group scheme, but members who use the externally managed funds will demand greater opportunity to move away from under-performing funds and take account of changes in fund managers. This will necessitate the introduction of additional funds and also the multi-manager / fund of funds approach." Anderson thinks the range of Standard Life funds is good.
The plans disadvantages next come under the spotlight. Anderson thinks there is nothing to allow IFAs to distinguish this plan from all the others. Gibbon says: "Since waiver of premium benefit was withdrawn, little attention has been given to protecting future contributions. In this plan a brief mention is made in the employer guide and I assume that the employer would insure via a group income protection scheme." Coleman highlights the inability to offer additional life assurance. Bumford says there are none, other than the fund options for pro-active investors.
Looking at the flexibility offered by the plan, Bumford likes the portability on leaving service and the payment options. Gibbon cannot think how it could be more flexible taking account of current regulations. Coleman says it is good and Colsell has one criticism: "Very good but only one free switch a year." Anderson says: "It is totally flexible as with any stakeholder-style pension arrangement."
The panel then comment on Standard Life's reputation. Gibbon and Colsell agree Standard Life has an excellent reputation. Bumford says: "Standard Life's reputation for financial strength will undoubtedly be a key factor in assuring the success of this plan. The ongoing improvements that are being made to its online facility increase its standing as a major player in the group market." Coleman thinks it has always had a good reputation in the pensions market. Anderson agrees it has a good reputation and adds: "It is still a mutual and the likelihood is it will stay a mutual for years to come. Time will tell if clients truly benefit from this status."
Analysing Standard Life's past performance record, Anderson thinks it is sound and Colsell thinks it is competitive. Gibbon thinks that like most insurance companies, its fund performance is mediocre. Coleman says: "Good when averaged over 10 years or more. Like all companies, performance in the last three years has been poor."
The panel think the products offered by Norwich Union and Scottish Widows will be the main competition, while Anderson suggests any existing GPP scheme. Bumford thinks self-invested personal pensions will compete strongly for high net worth clients seeking specialist products.
Assessing whether the charges are fair and reasonable, Gibbon says: "The basic 1 per cent charge falls into line with stakeholder charges. My personal view is that for complex products such as pensions, a 1 per cent charge does not leave a margin for making a profit. If the 1 per cent charge remains, there will undoubtedly be major changes in the industry, which I believe will not be beneficial to consumers in the longer term. The cost of 2 per cent for using an external manager seems high by comparison." Colsell and Bumford think they are reasonable.
Commenting on whether the commission is fair and reasonable, Coleman says the accelerated renewal commission over 10 years means it is a long time before receiving fund-based renewal commission. Bumford thinks commission is fair and reasonable but a high number of individuals needing one-to-one advice could mean additional fees. Colsell says the commission options are fair.
Finally, the panel comment on the product literature. Colsell says: "There are good, compact brochures that are well set out and user friendly." Coleman says: "It is clear and concise. I like the colour coded employee and employer guides and the reason why literature is helpful for IFAs for their reasons why letters." Bumford says providing additional information on available investment funds and asset allocations would help IFAs and their clients. Gibbon says: "The product literature is very glossy but lacks detail on crucial points. For example, there is very little information about the funds." Anderson says: "The literature is written in clear English. However, the employer brochure does look rather basic and gives the impression of a cheap contract rather than being quality or worthwhile and the literature will not help to sell the scheme."