Pension turnabout for Standard Life

Published on Saturday 12 December 2009 13:31

SCOTTISH insurance giant Standard Life is to return to the personal pension market after a five-year hiatus.

It is launching the Active Money Lifeplan, which will be built around Standard Life's existing self-invested personal pension (Sipp).

While the Edinburgh-based firm never fully left the personal pension arena, it decided five years ago to focus only on its Sipp, citing the high cost of adviser commission paid on personal pensions. However, it now believes there are fresh opportunities in the personal pension market and is to target workers aged between 25 and 40 earning around 40,000 a year and over.

But Paul Goodwin, head of pensions at rival Aviva, claimed the move could cause confusion for Standard Life pension customers.

"Will a customer who invests 50,000 in insured funds in the new personal pension be paying exactly the same charge as a customer they moved across to the Sipp who also has 50,000 in those insured funds? If the answer is no, I would want to know what Standard Life is going to do about it," said Goodwin.

Iain Wishart, proprietor of Wishart Wealth Management in Edinburgh, said Standard Life was seeking to reduce its dependence on independent financial advisers (IFAs) ahead of a 2012 upheaval in the way in which advice is paid for and provided, outlined in the retail distribution review (RDR).

"I imagine, that post-RDR Standard Life will be seeking more and more business through joint ventures and directly and less through the IFA channel. I cannot see what major improvements they can make to their personal and group pension range as they do what it says on the tin – so it may well be a rebrand and marketing push of their existing pension offerings."

He added that the delay in the full roll-out of the government's personal accounts regime would give insurers fresh hope that money can still be made in the personal pension market.

"The big fear in the pension market is the introduction of personal accounts as many low paid workers and those contributing under 3,600 a year may switch away from personal pensions and group personal pensions to the new government-sponsored pension plan," said Wishart.

"The delay and uncertainty surrounding personal accounts until 2013 may mean that insurers feel they can still make money in the personal pension market."

Meanwhile, Scotland's final salary scheme pension deficit continues to soar. It increased from 10 billion to 13bn, according to analysis by Buck Consultants. It said the pension scheme deficits in the accounts of Scotland's largest companies have continued to rise for eight months.