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This week in Pensions

With the Pensions White Paper consultation finally drawing to a close this week it has been very difficult to get many pensions stalwarts to talk about anything else.

Just as most of us habitually left it until the last minute to hand in our homework (or in my case, shamelessly copied my classmate Vikram Singh’s maths homework), almost every pensions commentator I spoke to last week had been frantically putting the finishing touches to his or her employer’s White Paper response.

But while providers are expending vast amounts of energy and brain power to secure their slice of the Personal Accounts cake, NPSS appears to have the same soporific effect on advisers as that most dreaded of all acronyms – Mifid.

Ok maybe that’s stretching it. But it is true to say that many advisers just can’t get too worked up about NPSS. It has very little to do with them and their client base and probably won’t see the light of day in any case, or so they say.

Attempts to persuade advisers that tomorrow’s NPSS savers might be the day-after-the day-after-tomorrow’s IFA clients do not hold
much sway.

With this in mind, Scottish Widows head of pension development Ian Naismith’s decision to run over the contentious issues of commission clawbacks and churning was almost refreshing – in a perverse kind
of way.

Naismith believes clawback periods on personal pensions and stakeholder products are set to increase to five years as the industry begins to take a tougher stance against churning.

Such a change would not be applicable to new-style, non-commission orientated pensions products. But with typical claw-back periods of three years on personal pensions and stakeholder products this would have a significant impact on many thousands of pensions contracts and, of course, the IFAs that sell them.

Naismith says Norwich Union’s recent decision to increase the clawback period on its individual personal pension from three to four years in a bid to write more sustainable business points to a growing trend designed to discourage churning.

Syndaxi Financial Planning managing director Robert Reid says he would welcome an industry-wide increase in clawback terms as it would make it more difficult for lacklustre IFAs to justify moving their clients’ money around.

But he quickly points out that providers introducing stricter clawback terms will also have to ensure quality service and good investment performance.

Lest we forget, there are legitimate reasons why IFAs move their clients from one pensions provider to another. And Reid says providers which do complain about churning may do well to examine the quality of their proposition before isolating many quality IFAs on their books.


Young Americans

Of all the unit trust sectors, it has to be said that America remains the most disappointing. Whereas most of us can reel off our favourite fund managers in Europe, the UK and the Far East, it becomes so much harder in America where finding consistency of performance is near impossible. One fund which has […]

Geography lesson

Asset allocation decisions for investors are implicitly and explicitly influenced by their attitude to the US. Wall Street is the biggest market, the US is the biggest economy and, courtesy of a high spending consumer, has been the dominant source of growth in economic activity – the catalyst of the recovery.

Flaw show

After three months, the consultation period on the Government’s White Paper on pension reform has now ended and there are many elements of the plans that provoke disagreement.

This week in Investment

HSBC’s announcement that it is to shift its core UK equity business away from Halbis Partners to its multimanager team has raised a few eyebrows in the investment community.

What exactly is product innovation?

By Fiona Tait, Pensions Specialist Ros Altmann reportedly hoped for more product innovation following pension freedom¹ and, according to one poll, 66 per cent of advisers also believe that providers should be doing more². This article considers whether there is a real client need for new products, or whether we should be focusing our attention on efficient delivery […]


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