UK - Deep-seated industry concerns over the success of stakeholder have been highlighted in an internal ABI document.
The document – Stakeholder Pensions: Project Plan – also warns that the industry should prepare itself against being blamed for any failures in stakeholder.
It said: “The aim of the ABI’s work on stakeholder pensions is to contribute to the success of stakeholder pensions and ensure that the industry gains some credit for this success. The industry will wish to identify barriers to success and offer acceptable solutions.
“Most importantly, if stakeholder pensions do not succeed in the volumes anticipated by the government, it is essential to avoid the industry being unfairly blamed for this failure.”
The paper sets out four options for improving product.These are:
• Compulsory scheme membership.• Compulsory employee contributions.• Improved incentives.• Compulsory employer contributions. Employer compulsion receives the most consideration among these choices.
Figures included with the document indicate the poor take-up rate of stakeholder with only 16,000 contacts being signed in the second quarter of 2001. This compares with 155,000 group pensions contacts – a sure indication that advisers have spurned the stakeholder product.
FPS chief executive Richard Stirrup said that generally advisers had been negative about stakeholder and told companies to extend group pensions instead. and have been negative about stakeholder pensions.”He added: “There has been a lot of resistance from both advisers and employers.”
With the October 8 deadline approaching, many members of the industry are now predicting that OPRA will penalise a few high profile companies in a bid to increase stakeholder compliance.
• OPRA chief executive Caroline Instance will outline the regulator’s approach to compliance and implementation at The Pension Show.Instance will be speaking on the first afternoon of the two-day conference which is being held at at London’s Business Design Centre on October 17-18.
Further information can be found at www.thepensionshow.co.uk or by phoning (020) 7940 7248.
By Jonathan Stapleton
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