The new partial concurrency rules under stakeholder could spell the end of the additional voluntary contributions market, says Punter Southall & Co.
A survey of the UK's top 350 companies recently conducted by the consulting actuaries shows 85 per cent of eligible employees will consider using stakeholder as an alternative to AVCs. Under stakeholder rules, employees earning up to £30,000 a year can contribute to stakeholder while remaining in their employer's occupational scheme.
This has fuelled concern that instead of simplifying pension planning, stakeholder is likely to baffle savers because it offers yet another choice.
Punter Southall says although stakeholder was designed to benefit low-earners, it has ended up as a savings plan which will benefit big numbers of higher earners who typically contribute to AVCs.
Principal Steve Leake says: “Stakeholder concurrency may also encroach into the AVC market since the attractive features of stakeholder, which include providing part of the benefit as a tax-free lump sum, will make them a very competitive alternative to AVCs.”