Your Pension @ Norwich Union
Type: Group stakeholder pension.
Minimum premium: £20.
Minimum group size: 1.
Minimum-maximum ages: 16-74.
Fund links: Stakeholder with-profits, balanced managed, UK index tracker fund, sustainable future managed, retirement protection, deposit, defensive managed, UK equity, European equity, US equity, global bond, global equity, Pacific equity, index-linked gilt, gilt, international index tracker, property, sustainable future UK growth, sustainable future global growth, sustainable future European growth, sustainable future corporate bond, sustainable future absolute growth, Deutsche balanced, Deutsche Japanese equity, Deutsche UK equity, Deutsche North American equity, Deutsche UK small company, Deutsche multinationals, Invesco managed, Invesco global equity, Invesco UK smaller companies, Invesco international equity, Invesco European equity, Merrill Lynch balanced portfolio, Merrill Lynch high income bond, Merrill Lynch income, Merrill Lynch European growth, Merrill Lynch American, Societe Generale stockmarket managed, Societe Generale global managed.
Charges: Annual 0.4-1 per cent.
Allocation rates: 100 per cent.
Minimum term: One month.
Special offer: Annual charge reduced to 0.25-1 per cent after five years.
Offer period: Until further notice.
Commission: Single premium fund based 0.4 per cent. Regular premium – Either fund based 0.4 per cent or initial 30 per cent of Lautro, renewal 2.5 per cent or initial 20 per cent of Lautro, fund based 0.2 per cent or level 2.7 per cent.
Tel: 0845 9444800.
Investment Options 7.0
Company's Reputation 8.5
Past Performance 7.8
Product Literature 7.5
Norwich Union has introduced Your Pension @ Norwich Union, a pension that can be set up as either a group personal pension or a group stakeholder plan.
Looking at the way that the plan fits into the market, Storer says: “Having arrived on the back of what seems to have been a huge publicity campaign, it is not so much a matter of this plan fitting into the market, but of this plan actually shaping the market. My guess is that it will probably be one of the top three products.”
Shaw is more cautious. He says: “Not every pension provider has introduced a stakeholder product because of the annual management charge cap. It means that they will not be able to make them profitable.” Briggs says that most major companies in the pensions market are now offering stakeholder pensions.
Lewis says: “Norwich Union is a well-known brand name and the stakeholder plan is competitive in the market along with the other major players. Norwich Union has proven to be a popular name in the pensions market.”
Looking at the type of client that the product is suitable for, Storer says: “This is for just about any non-exempt employer.”
Briggs says: “This is suitable for firms with five or more employees which need to comply with the new stakeholder regime requirements before October 2001.”
Moving on to the sorts of marketing opportunities that the plan will provide, Shaw says: “Stakeholder pension schemes are really not suitable business for IFAs unless written within a group situation like this one. Employers will be targeted and their employees may have other financial needs, for products such as life assurance or mortgages.”
Storer says: “Along with other designation schemes on the market, it provides an excellent opportunity to make inroads on the corporate market. Where relevant it also provides a very good basis on which to introduce corporate clients to the notion of paying fees for advice. In the long term this could be the most significant marketing opportunity of all.”
Identifying the main useful features of the plan, Lewis says: “The strong points of the plan include the name of Norwich Union itself and naturally the 1 per cent charge in line with other companies. There is also the competitive nature of the pension.”
Shaw says: “The main useful feature is the requirement of the charge being no more than one per cent of the fund.” Briggs adds: “Norwich Union make it as easy and as straightforward as possible for an employer to meet the stakeholder pension obligation. The literature and draft letters are especially good.”
Storer says: “The guidance in the literature is very through and covers most of the issues likely to be raised. However the real strength of the plan will be in the quality of the setting up process and the ongoing administration. Other than the investment performance, this is the only tangible way in which one provider can distinguish itself from everybody else. So the answer to this question is not yet clear.”
Turning to the other side of the coin and looking at the disadvantages of the pension, Briggs says: “Basically we are dealing with a vanilla product here and there seems to be little to differentiate one company from the others. In some instances it will come down to fund choices and the past performance of the funds.”
Storer says: “There are no disadvantages specific to this product, although the debate over the with-profits fund is not helpful when explaining the product to potential new members.”
However Lewis says: “The only disadvantage is Norwich Union itself. Due to the company's various mergers and the nature of stakeholder itself, there is internally a lot of confusion, with different areas of pension departments dealing with different areas. This has caused considerable delays, which together with the influx of new business at the end of the tax year has caused great concern.
“I have personally experienced considerable delays, with problems such as lost cheques, proposals, and delays in issuing normally straightforward single premium payment documentation, which causes a great deal of frustration to all IFAs.”
Looking at the range of investment options, Storer says: “There is more than enough flexibility in terms of choice of funds and the funds are, by and large, more than satisfactory in performance.”
Briggs says: “The fund choices are comprehensive and will suit most situations. It is however a great pity that the pension assured fund is not included – I understand this is due to its rather opaque nature rather than not meeting the 1 per cent annual management cap.”
Casting an eye over the reputation of Norwich Union, Briggs thinks that the reputation of Norwich Union is impeccable. He says: “Norwich Union is a market leader in the UK at present and has a strong asset base and a strong range of products through various acquisitions over the last few years. The Norwich Union brand is well known and has a good reputation generally and therefore this will hold it in good stead.”
Storer says: “I am sure that there have been harsh and unprintable words uttered by many an IFA in respect of the fall-out following the CGU/Norwich Union merger but, not withstanding the problems over product range, duplication of products, lack of stationary, contact points and so on, it has to be said that investment performance has not suffered and that fund integration has gone well.
“It may just be my experience, but the new post merger Norwich Union really does seem to be greater than the sum of its parts, thus improving an already very good reputation.”
Shaw says: “Norwich Union is one of the three or four leading player in the market, having swallowed General Accident and Commercial Union. Its reserves are quite vast.”
Moving on to the product literature, Lewis says: “This is well branded with Norwich Union and the colour coding on a white background is quite useful. The application forms where there are several sets are somewhat confusing. The actual pack, with letters, posters and other material, is very useful, and is well thought out and easy to read.”
Shaw thinks that the literature is excellent and not too flashy, while Briggs says: “It is very clear and concise and is generally user-friendly. I particularly like the draft announcement letters and the accompanying staff booklet.
Storer says: “The literature is very thorough and comprehensive, although it is a little long-winded at times. The array of different brochures and single pages does not make it the easiest stakeholder package in the market (Axa is the winner here) but Norwich Union does not seem to have missed anything.”
Finally Shaw comments: “Politicians seem to think that they know best about everything. However I fear that the very people that stakeholder is designed for, the lower paid, will not take part unless their boss pays some of the contribution.”
Robert Briggs, Principal, Robert A Briggs ACII, Colin Shaw, Director, Woodfield Financial Services, Keith Lewis, Proprietor, Hartley Greatbatch, Tim Storer, Financial Services Director, Luker Rowe & Co.