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BeeHive  >  BeeLines  >  Your views on the changes to Stakeholder Pensions

Your views on the changes to Stakeholder Pensions

You’ll remember, I hope, the BeeLine from last week outlining the Government’s plans for Stakeholder Pensions and the fact we are now in yet another period of consultation on the subject. If you can’t remember that you can have another look at the BeeLine by following the link here. If that’s too much trouble let me just summarise by saying the main question being asked by the Government is “do people agree that lifting the charge cap on Stakeholder Pensions from 1% to 1.5% will enable distribution through the new so-called basic advice process?”

Now, of all the responses that Government get on this, I think it would be good if we can add the weight of opinion of practitioners who have daily hands-on experience of distributing pensions both to individuals and to groups in the workplace. I’ve spent the weekend trying to think of a question we could use on the BeeHive home page that would hopefully provide a helpful response. I think I’ve come up with something.

It seems to me, and most of you probably already know what I think about this, that the price of the product is hardly of any relevance at all compared to the suitability or otherwise of the product. A pension that is unsuitable for someone does not become more suitable as the price changes. An unsuitable product that is cheap is still unsuitable. Making it slightly more expensive doesn’t change that position one jot.

What the Government needs to look at, I think, is the wider issue of suitability and not get bogged down in the issues of price and the introduction of some form of limited ‘advice’, whatever that really means. Indeed, by introducing the concept of basic advice it is raising the very real possibility that unsuitable pension products may be ‘mis-bought’ by people. Replacing the dangers of mis-selling with the even more dangerous idea of mis-buying seems to me to be an unhelpful step in the wrong direction. The question I have added to the home page today centres on this as a theme and is:

“Do you think the Government should ensure Stakeholder Pensions are suitable investments for all in the UK workforce before it introduces the concept of ‘basic advice’?”

I hope you think it’s important enough to add the weight of your vote to the debate. The consultation period on this is quite short (it closes on 17th December) and I want to put the results of the BeeHive poll to Government well before then. I’d also like to see if we can generate press coverage of the views of IFAs to add to the public debate on this important issue too.

If you want to vote you can do so by following the link here, or you can just go to the BeeHive home page any time by clicking on the logo at the top of any BeeLine. Also, if you know anyone else who would like to add their twopence worth, why not e-mail a link to the site to them (you can do that from the home page too), the more the merrier is what I always say. Well, not always, obviously, but I say it a fair bit, put it that way…

Steve Bee
8 November 2004

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