UK - Royal Bank of Scotland has quit the group stakeholder market because there has been "limited demand" for the government's flagship retirement savings vehicle.
The bank’s subsidiary life offices – Royal Scottish Assurance and NatWest Life – have given clients four months’ notice to move their assets to another provider. After that, all remaining assets will be transferred to equivalent schemes with RBS’s partner, Norwich Union.
An RBS spokesman said: “We have seen limited demand for the product since its launch in 2001 and as a result have concluded that the needs of our existing stakeholder pension customers can be best served by closing the existing scheme and recommending our life and pensions partner Norwich Union.”
He added: “Norwich Union already provides the fund management support for RSA and NWL.
“We are writing to all our stakeholder customers giving them the required four months’ notice and details of the options available to them.”
The exit follows fresh hopes that the 1% cap on stakeholder pensions vehicle could soon be raised. The optimism follows publication of draft regulations for the child investment trust which set the price cap at 1.5%.
New rules outlined by the Financial Services Authority indicating that stakeholder pensions could be sold without advice from April 2005 are also expected to help boost sales.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.