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Stewart Ritchie

Recent surveys have shown that employers and the public are ignorant and apathetic when it comes to stakeholder pensions. But with just six months to go before launch, this may be about to change. The Government&#39s publicity campaign has moved up a gear with the publication of a guide for employers. This is an easy-to-read booklet explaining what employers have to do to keep on the right side of the new law.

What it says about advice is, like the curate&#39s egg, good in parts. It states very clearly that employers must not advise employees. Unfortunately, it is silent about what employers should do when employees come to them seeking advice.

The stakeholder campaign will move into overdrive when the Government starts its advertising push to the public. The budget for this is reputed to be many millions of pounds and we have to assume that, with a spend of this size, the campaign will bring stakeholder strongly into the public consciousness. Hopefully, this Government will have learned the lessons of the overselling of personal pensions in the advertising of the late 1980s – remember the breaking out of straitjackets and bursting free from chains? – and I trust the campaign will generate public interest rather than trying to tell people that stakeholder is right for them.

Nevertheless, it would be naive to assume the ad campaign will not focus on price. After all, the key features which differentiate stakeholder from other forms of group personal pension are the prescribed charge cap and simple charging structure. However, as long as the Government&#39s promotion of stakeholder is done responsibly, it must be good for advisers and providers. We do not even have to meet the cost of it directly, as it comes courtesy of taxpayers as a whole.

What should an IFA do when employers start asking for help? Probably, the first move is to ask what they are trying to achieve. The answer may be to put in place a decent pension scheme for the employees. If so, the IFA has scope to justify becoming involved, whether on a fee or commission basis. However, if the employer&#39s objective is simply to comply with the law and avoid getting into trouble with Opra, it is less immediately obvious that the IFA can justify becoming involved.

Further questions must be asked. Is the employer prepared to pay fees? If so, it may not matter if the outcome is compliance with the new law but without a brass farthing of pension contributions being passed to employees. But if the employer simply wants to be compliant and is not prepared to pay fees, the IFA needs to question whether there is any reason to get involved in what is likely to be a loss-making venture. Perhaps the IFA has other existing business with this employer or there are prospects to set up group risk cover or pensions for the senior management.

There are other pension issues which will generate work for IFAs worried about the impact of stakeholder on their businesses. Pension sharing on divorce will be available to every couple whose divorce begins on or after Decem-ber 1 this year. Also, changes to the transfer regulations will mean reviewing the position of well-funded or high-earning people who are currently in the occupational pension regime but might wish to retire in the new personal pension/stakeholder regime.

It seems these days there is never a dull moment in pensions and the need for pension advice just keeps on growing.


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