The UK government-imposed cap on the cost of stakeholder pensions is a price control which should not exist in a free market, according to a panel of industry experts who met at Skandia Life's recent Pathfinder Forum.
The panel, consisting of Nicola Horlick, joint managing director of Societe Generale, Paul Myners, chairman of Gartmore, Professor Tim Congdon, managing director of Lombard Street Research and Michael Hughes, chief investment officer at Baring Asset Management, agreed that the 1% cap on the cost of stakeholder pensions limits the depth of advice IFAs can give to consumers who are entering the pensions arena.
Myners warned that government hopes of tempting more and more workers into stakeholder pensions could fall flat by the turn of the year, adding that compulsory take up of stakeholder pensions would imply an erosion of freedom. “Stakeholder pensions will simply not be bought on this charging structure,” he said.
“You have to take the cap off because these products have to be sold in an informed way by an educated sales force or adviser who is able to devote sufficient time to identify the right product for his client. That cannot be done on 1%”.
During the debate, chaired by Sir Trevor McDonald of ITV News, the panel claimed investors could be forced into inappropriate products if expert advice was not fully available to them due to a focus on low price.
By Janet Du Chenne
The Pensions Regulator (TPR) and Labour MP Stephen Kinnock and will listen to the experiences of steelworkers when transferring their pensions away from the British Steel Pension Scheme (BSPS) next week in Port Talbot.
Just Group has acquired a 75% stake in the holding company of Corinthian Pension Consulting in a bid to strengthen its professional defined benefit (DB) advisory services.
The Pensions Regulator (TPR) has exercised its production order power under the Proceeds of Crime Act 2002 for the very first time as part of a fraud investigation.
The ITN Limited Pension Scheme has named Trafalgar House as its administrator for an initial term of five years.