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The business is out there

Don&#39t despair, the work is out there,you just have to look carefully. Some

smallerIFAs seem dismayed at the potentially adverse impactof stakeholder

pensions on their business.

They point to the much reduced capacity of commission under stakeholder

when compared to personal pensions and correctly infer that it will be very

difficult to justify selling a new £100 per month personal pension

which has a significantly more expensive charge and commission structure

than stakeholder.

In my view, this is too pessimistic by half. There is very significant

potential for new pension business as a result of the Government&#39s pension

initiatives but we will all haveto be prepared to adapt if we are to

survive and prosper.

The corporate pension market is clearly set for take-off. Every employer

with at least five employees will need to review its pension arrangements

to ensure it is compliant with the new legislation by October 8, 2001.

At the very least, this could involve changes to eligibility conditions so

that an employer with an existing occupational pension scheme or group

personal pension iscovering all of the workforce who must be offered

something. If it is a GPP, it could involve increasing the employer

contribution rate to at least 3 per cent or the employer must be prepared

to offer stakeholder.

Employers with at least five employees who do not currently offer any kind

of pension are going to have to do something.

Hopefully, many will decide they really want to introduce a “proper”

pension scheme and not just facilitate stakeholder with all its associated


Even if the employer is simply seeking reassurance that it is compliant,

that will involve a compliance audit and documentation which can be

produced if anyone ever complains to the Occupational Pensions Regulatory

Authority. That is a service for which the IFA can justifiably charge a


IFAs involved with a particular employer could also check the pension

arrangements for directors and senior executives, and the risk benefits.

All this is without evenconsidering the possibilitythat employers with

existing defined-benefit schemes will be seeking to restructure into some

form of money purchase.

There will be plenty of scope for individual business as well. Think about

the spouses, children and grandchildren of the IFA&#39s exist-ing client bank.

Remember that standard-rate tax relief is available for stakeholder and

personalpension contributions up toa gross £3,600 per annum,

irrespective of age and without any earnings having tobe demonstrated.

However, some care will be needed here to make sure the concurrency rules –

whatever they turn out to be – are not broken.

Think also about the fallout from decision trees. There are going to be a

lot of moderate earners who have gone through the decision-tree process and

come out knowing that they need individual advice which will not be

provided in the workplace.

They are unlikely to be prepared to pay fees but I hope the final version

of decision trees may cause them to realise they need individual savings

accounts, life cover, or sickness cover, even if pension provision is some

way down their personal agendas.

Finally, don&#39t forget that a key plank in the Government&#39s strategy is

increasing the general level of public awareness of pension and other

financial planning issues.

Given how many peopleare going to get this wake-up call about their

finances – perhaps through combined benefit statements – it is hard to

believe that competent anddiligent IFAs can be short of work in the

foreseeable future.

Perhaps those who doubt this just need to concentrate on a clear business

focus to ensure work is prioritised to makeit as profitable as possible.


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