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Triple choice from Scottish Life

SCOTTISH LIFE

RETIREMENT SOLUTIONS

Type: Group stakeholder pension option.

Minimum premium: £20.

Minimum group size: 5.

Minimum-maximum ages: 0-74.

Fund links: Pensions managed, deposit, defensive managed, UK equity, UK ethical, UK mid-cap, European, American, Pacific, property, fixed interest, index linked, global managed, worldwide, security 100, security 98, Scottish Life/Schroder Hermes UK index tracker.
Charges: Annual 0.45-1 per cent, transfer values 0.2-1 per cent.
Allocation rates: 100 per cent.

Minimum term: None.

Options: Life assurance, payment protection, income protection.
Special offer: Minimum annual charge for transfer values reduced to 0.2 per cent.

Offer period: Until further notice.

Commission: Initial 0-27.5 per cent, renewal 0-5.5 per cent, level 0-5.5 per cent for regular premiums, single premiums and DSS contributions, fund based 0-0.55 per cent, 0-0.8 per cent for transfer values.

Group Money Purchase Pension

Type: Group money purchase pension.

Minimum premium: £750 average per member a year.

Minimum group size: 5.

Minimum-maximum ages: 16-75.

Fund links: Pensions managed, deposit, defensive managed, UK equity, UK ethical, UK mid-cap, European, American, Pacific, property, fixed interest, index linked, global managed, worldwide, security 100, security 98, unitised with-profits, Fidelity managed equity, Fidelity UK growth, Perpetual managed equity, Perpetual UK equity, Phillips & Drew managed equity, Phillips & Drew UK equity, Scottish Life/Schroder Hermes UK index tracker, Schroder managed balanced, Schroder UK equity, Scottish Life International 100 per cent protected UK index, Scottish Life International 100 per cent protected US index, Scottish Life International 100 per cent protected Japan index, Scottish Life International 100 per cent protected Europe index, Scottish Life International 100 per cent protected multi index, Scottish Life International 98 per cent protected UK index, Scottish Life International 98 per cent protected US index, Scottish Life International 98 per cent protected Japan index, Scottish Life International 98 per cent protected Europe index, Scottish Life International 98 per cent protected multi index, Scottish Life International protected UK with bonus, Scottish Life International protected US with bonus, Scottish Life International protected Japan with bonus, Scottish Life International protected Europe with bonus, Scottish Life International protected multi with bonus, Scottish Life International protected.com with bonus, Scottish Life International protected worldwide with bonus.

Charges: Annual – internal funds – 0.45-1.35 per cent for regular premiums, 0.45-0.75 per cent for single premiums and DSS contributions, 0.2 per cent for transfer values. Additional charge of up to 1 per cent if fund based renewal commission selected. External funds – 0.45-2.3 per cent for regular premiums, 0.45-1.7 per cent for single premiums and DSS contributions, 0.2-1.15 per cent for transfer values. Performance related fee for Scottish Life International 98 per cent protected multi index and Scottish Life International 100 per cent protected multi index 0.15-0.4 per cent.

Allocation rates: 100 per cent for regular premiums and transfer values. 95-100 per cent for single premiums and DSS contributions.

Minimum term: None.

Options: Life assurance, payment protection, income protection.

Special offer: Minimum annual charge for transfer values reduced to 0.2 per cent.

Offer period: Until further notice.

Commission: Initial 0-30 per cent, single premiums and DSS contributions up to 5 per cent, renewal 0-5 per cent, fund based 0-1 per cent, level 0-6 per cent.
Group personal pension

Type: Group personal pension.

Minimum premium: £750 average per member a year.

Minimum-maximum ages: 0-74.

Fund links: Pensions managed, deposit, defensive managed, UK equity, UK ethical, UK mid-cap, European, American, Pacific, property, fixed interest, index linked, global managed, worldwide, security 100, security 98, unitised with-profits, Fidelity managed equity, Fidelity UK growth, Perpetual managed equity, Perpetual UK equity, Phillips & Drew managed equity, Phillips & Drew UK equity, Scottish Life/Schroder Hermes UK index tracker, Schroder managed balanced, Schroder UK equity, Scottish Life International 100 per cent protected UK index, Scottish Life International 100 per cent protected US index, Scottish Life International 100 per cent protected Japan index, Scottish Life International 100 per cent protected Europe index, Scottish Life International 100 per cent protected multi index, Scottish Life International 98 per cent protected UK index, Scottish Life International 98 per cent protected US index, Scottish Life International 98 per cent protected Japan index, Scottish Life International 98 per cent protected Europe index, Scottish Life International 98 per cent protected multi index, Scottish Life International protected UK with bonus, Scottish Life International protected US with bonus, Scottish Life International protected Japan with bonus, Scottish Life International protected Europe with bonus, Scottish Life International protected multi with bonus, Scottish Life International protected.com with bonus, Scottish Life International protected worldwide with bonus.

Charges: Annual – internal funds – 0.45-1.35 per cent for regular premiums, 0.45-0.75 per cent for single premiums and DSS contributions, 0.2 per cent for transfer values. Additional charge of up to 1 per cent if fund based renewal commission selected. External funds – 0.45-2.3 per cent for regular premiums, 0.45-1.7 per cent for single premiums and DSS contributions, 0.2-1.15 per cent for transfer values. Performance related fee for Scottish Life International 98 per cent protected multi index and Scottish Life International 100 per cent protected multi index 0.15-0.4 per cent.
Allocation rates: 100 per cent for regular premiums and transfer values. 95-100 per cent for single premiums and DSS contributions.

Minimum term: None.

Options: Life assurance, income protection, payment protection.
Special offer: Minimum annual charge for transfer values reduced to 0.2 per cent.

Offer period: Until further notice.

Commission: Initial 0-30 per cent, single premiums and DSS contributions up to 5 per cent, renewal 0-5 per cent, fund based 0-1 per cent, level 0-6 per cent.
Tel: 0131 456 7152.

David Francis, Principal, David S. Francis Insurance Brokers,

Chris Jordan, Certified financial plannner, Cavendish Financial Management,

Keith French, Managing Director, French & Associates, David Wood, Sole trader,
David A. Wood Life & Pensions

Options 8.8

Flexibility 8.8

Company&#39s reputation 5.8

Past performance 5.5

Charges 8.0

Commission 8.3

Product literature 8.0

Scottish Life&#39s retirement solutions is a menu-style pension product that provides employers with a choice between a group personal pension, a group stakeholder plan or a group money purchase scheme for their workforce.

Assessing how the plan fits into the market, French says: “The plan fits very well. The thing that makes it stand out for me is the three in one idea that Scottish Life have been promoting. It also allows me to trade electronically with clients who are capable of doing so, while offering the traditional support package for clients not yet so advanced.”

Francis says: “The plan is Scottish Life&#39s version of the stakeholder solution. It has combined most aspects of complying with stakeholder regulations into one package which should make it attractive to companies with no pension provision at all.”

Jordan thinks it offers everything required to survive in the new group pensions market.”

Identifying the type of company the plan is suitable for, Wood says: “It is suitable for companies of any size.” Jordan says: “It is suitable for small to medium sized companies which do not currently provide a retirement benefit scheme. Companies who would consider occupational pensions schemes to be too expensive.”

French says: “Because you can mix and match stakeholder, GPP and CIMP components under this product, you can effectively develop and tailor a solution for any type of company.” Francis says: “Any business that has no pensions provision but with an interest in providing more than a basic stakeholder option.”

Moving onto the marketing opportunities the plan is likely to provide, Francis says: “It is a simple contract for IFAs to use to promote their involvement in the stakeholder market. It could encourage clients to make contributions and give IFAs the opportunity to expand the areas of advice.”

French says: “This product is a bit like having a tool kit in your bag. You have the right tool for every situation. I feel I would be able to approach any size of company with this and be able to offer them a suitable solution to fit their needs.”

Wood says: “I would like to be positive about this but with so many providers, it is difficult. I do like the combined life cover income protection and payment protection that is available. Jordan says the features available from Scottish Life are already available elsewhere.

Turning to the useful features and strong points of the plan, Jordan says: “It provides the type of scheme to meet employer&#39s requirements, flexible commission, good investment choice and administration systems.”

Francis points to the plan&#39s flexibility. He also mentions its simplicity, online administration and wide range of investment options.

French says: “The three components are different and this allows me to show my clients that by taking the GPP they have more extensive investments options than under the stakeholder component. The e-commerce aspects of this products are ideal. Scottish life has set up an area where my clients and I can practise various processes without affecting the real system. This is a good selling point with clients who are unfamiliar with technology.”

Analysing the options available under the plan, Jordan says: “The options provide everything needed to survive the intense competition within this market. The range of options is very good but they are probably the minimum required to be a long term player.”

French says: “There is a full range of risk benefits so I can provide a full employee benefits package if that&#39s what my clients require. There is also an extensive range of investment options, including external funds.”

Francis says: “The range of options appears to be all encompassing and offers the opportunity to create a good employee benefits package. The package also gives the opportunity to widen the scope of advice.”

Discussing the drawbacks of the plan, Wood says: “It is a good plan but I think it will be difficult to convince some employers of all the benefits.” French says: “Some advisers may see the limited fund links under the stakeholder component as a disadvantage. I do not as it allows me to differentiate between the components and that is important to me when I am advising.”

Moving onto the plan&#39s flexibility, Jordan says: “It is very good. It provides all the necessary flexibility to gain a reasonable market share.”
French says: “The product is extremely flexible and I like the fact that I can move people between the different components effortlessly. This gives me the opportunity to recommend a combination of products for clients without having to worry about transfers, charges and charges in administration procedures. It also offers the flexibility to set commission levels and charges individually at member level to reflect the amount of work I do for different types of members.”

Discussing Scottish life&#39s reputation, Wood says: “Its reputation is not always good. It promises a lot and delivers very little.”

Jordan agrees. He says: “My experience of Scottish Life is that of inefficient systems, inflexibility and a lack of support. I do not understand how they win five star service awards – clearly other providers have a much higher level of service.”

French offers a warmer response. He says “Scottish Life&#39s reputation is probably better known in the industry than it is to the general public. However, it is a reputable company and offers a great deal of support to the IFA market.”

Francis says: “Its reputation is good. However, it has persistently refused to enter the stakeholder market until now. While the contract is attractive, the timing of the entry is unfortunate.”

Moving onto Scottish Life&#39s past performance record, French says: “Scottish Life has a wide range if funds as well as access to a selection of well respected fund managers. its success has been possible through its expertise and commitment to investment strategies, which have performed competitively in a variety of financial climates.”

Wood thinks the company&#39s past performance is very poor, but Francis points out that press reports and statistics suggest it is good.
Jordan thinks it is average.

Identifying likely competitors, Wood cites Standard Life, Norwich Union and Scottish Equitable. Francis says that there will be no direct competition, but feels companies such as Scottish Widows will compete with the basic contract.

French says: “Initially, there will be many competitors. Friends Provident and Scottish Mutual are likely to provide overall competition, with some of the banks as competitors in the stakeholder only market.”

Jordan says: “All the main players in the pension market. Most are much bigger or have greater resources. I fear Scottish Life will be a target for a take-over or merger. Where would this leave service levels? Maybe there are more tried and tested pension companies to use an uncertain and fluid market place.”

The panel agree that the charges are fair and reasonable.
Francis, Jordan and Wood think the commission is fair and reasonable.
French says: “The general repricing that pension contracts have had has a big impact on commission. Under the circumstances, the commission offered by Scottish Life is fair and reasonable with a variety of options available that reflect the initial and ongoing servicing costs.”

Francis thinks the product literature is good and believes the charts are useful. French thinks the product literature is user friendly and Wood thinks it is very good. Jordan says: “It is clear and comprehensive. It is not very inspiring &#45 just workmanlike and functional.”

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