In April, 2002 stakeholder will have been running for a year. By then I expect there will be strong interest among IFAs in looking at the numbers of members and the amounts of contributions which will by then have been achieved by each stakeholder provider, as this will be a pointer to who the survivors will be.
Even in this month, it is possible to make a fairly educated guess based on the credibility of the sales and marketing strategies of the dozens of different stakeholder providers but I leave that to unbiased commentators.
I think the key unknown between now and April 2002 is the behaviour of employers and in particularly those who do not already have extensive existing pension coverage which exempts them from having to offer stakeholder. What proportion of such employers will comply with the stakeholder legislation by the October 7 deadline? Of those who do not, how many will simply wait until Opra comes knocking on their door?
My hunch is that, even in April 2002, there will be many such employers providing a steady stream of work for IFAs as Opra picks them off.
The employers of greatest interest to IFAs will be those who decide not just to comply with the stakeholder legislation but actually to make decent pension provision for their workforce.
By April 2002, most of that will have been established, with eligibility conditions for existing occupational and GPP schemes widened, new schemes set up and so on. I strongly believe that employers who are willing to pay at least 3 per cent should look at GPP rather than stakeholder on grounds of hassle and flexibility.
By April 2002, it should be clear to everyone that stakeholder is just a restricted form of GPP.
Another big issue for emp loyers will be the extent to which they are prepared to include the cost of individual advice in the pension plan they offer to their employees.
Ironically, it is probably the employers who are prepared to pay least in contributions who will also be least willing to incorporate individual advice. The reason it is ironic is bec ause that is precisely where individual advice is most nee ded. The more an employer contributes, the more of a no-brainer it bec omes for the employee to do it.
I also expect that the severe shortage of pension specialist advice during 2001, as IFAs are besieged by law-abiding employers seeking to be compliant before the deadline, will lead to a greater appreciation of the value of that advice.
By April 2002, I expect nobody will bat an eyelid about a GPP charging above the 1 per cent stakeholder cap, provided that the added value of the GPP has been clearly set out, including individual advice as appropriate in the circumstances.
I expect that decision trees will be firmly rooted by April 2002 but they will be bonsai, not mighty oaks. They will help a lot of people get ideas clear in their head but the disclaimers decision trees carry will point firmly to their limitations.
In short, they should not and will not be relied upon for detailed decision-making.
I expect IFAs will be writing vigorous business either side of April 6, 2002 through high earners paying whatever is the equivalent of £3,600 when netted down for basic rate tax, for spouses, children and grandchildren.
Those who are motivated by the “use it or lose it” deadline will for the first time be paying this in to stakeholder or a personal pension at the same time as they are writing out their regular Isa cheques.
Those who are better org anised will be planning to make the second £3,600 payments after the tax year deadline has passed.
By April 2002, I expect IFAs will also be well in to their programme for advising actual or potential AVC payers who could benefit from concurr ency. The key question here is who will pay for such people to receive the individual adv ice they need? My suspicion is that the answer will often be nobody. If that is so, the IFAs' programmes may be fairly slim and the issue will simply be picked up as IFAs are looking at the individual for ano ther reason.
By April 2002, the detailed principles of the legislation for pension credit should be known, even if it has not completed all its Parliam entary stages.
Hopefully, there will not need to be much change to the guidance which I expect to be issued by the FSA prior to stakeholder starting in April as to how pension credit should impact advice.
I expect individual pension accounts will be a tiny niche market, of value only to a dedicated minority of Sipp enthusiasts.
I expect IFAs will be busy in April 2002 looking up clients who earn more than half the pension cap, are in the old occupational regime and will shortly reach their 45th birthday.
Such people need to dec ide whether they should transfer to the new regime before it becomes difficult or impossible for them to do so.
One area which I hope will be thriving in April 2002 is the provision of risk benefits. It is understandable if sometimes they are put on the back-bur ner in the rush for compliance up to October 8 but the longer they are neglected the greater the chance that employees will fall ill, have an accident or die.
That would be a catastrophe for the employees and their relatives and a serious embarrassment for the emp loyer who had not quite got round to setting up the cover.
Finally, I hope and expect that proper documentation will be standard practice. The employer will document stake holder compliance procedures so that these can be proven to Opra if necessary. The IFA will document the reasons for the advice given to the employer about the stakeholder legislation and how this was bought into by the employer.