UK - The pensions industry needs to agree on a set of standards to govern how stakeholder pension funds and products are presented if it is to stave off accusations of being misleading, according to ratings agency Standard & Poor's (S&P).
S&P said that the industry needed to reach an agreement on a fair basis for performance advertising claims before any possible charges are made.
The firm explained that the investment pools of unit-linked stakeholder pensions vary from provider to provider.
“The presentation of performance records for these funds are crucially affected by charges,” said S&P.
“Although companies providing the stakeholder pension can charge a maximum of 1%, non-stakeholder funds may carry differing charges imposed in differing ways such as “dual pricing”: that is, one price for the seller, a different price for the buyer.”
S&P said that products are being compared without differing levels of annual management charges and bid-offer spreads when, after allowing for total charges, the results of comparisons may be very different.
The firm proposed that the industry should first establish a formula for comparing the past performance records of single priced products with those of former dual priced products.
The second suggestion was that a direct comparison should be made between investment performance of each single underlying fund, gross of fees, followed by separate analysis of each individual product, as well as supplementary information about the terms of each product.
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