Two thirds of advisers do not fear Personal Accounts

There is a wide split in the anticipated effect on pension business from Personal Accounts and auto-enrolment, according to research carried out at the Corporate Adviser Summit last month.

When asked what effect the introduction of Personal Accounts would have on the volume of pension assets under advice held by their firms, 39 per cent of delegates, drawn from 40 of the top corporate advice firms, said they expected an increase, while 37 per cent predicted a decline in business and 24 per cent thought it would make no difference.

Firms also revealed a widely differing view of how they will deal with the opportunity presented by the requirement of British companies to offer contributory pensions for the first time. 34 per cent of adviser firms said all employers would be worth targeting, while 31 per cent said they would only target those firms with 250 employees or more or those with above-average salaried staff. A further 34 per cent said that those companies not providing pensions today would be unlikely to want to pay for their services.

A majority of intermediaries are generally confident that providers will be able to create workplace pension products that will allow them to offer a differentiated solution to Personal Accounts. Three quarters of firms think providers’ offerings will be up to the job, while 23 per cent are either fairly or very unconfident that they can deliver.

Advisers also showed a preference for limited investment choice in pensions offered through the workplace. Only 19 per cent said employees need access to a broad range of the best fund managers, while 50 per cent said less than 20 funds were needed. A further 13 per cent said all that was needed was a choice of quality default funds and 19 per cent said a single default fund with proper lifestyling is sufficient for the majority.

Almost half of advisers are dissatisfied with the default funds that are currently on the market, with 46 per cent either generally or very dissatisfied with the way existing products meet their clients’ needs.

Rachel Vahey, head of pensions development at Aegon Scottish Equitable said: “We need to make sure there is a level playing field between Personal Accounts and the rest of the market. Personal Accounts is not a state-run scheme, it is just a very big occupational scheme and it does not deserve any favours.

“Paul Myners recently said that Personal Accounts will set a benchmark for administration and communication. He is effectively saying what he will do will be fantastic. We have got to make sure that the regulatory requirements are equal right across the board.”

Gareth Evans, head of corporate affairs at Royal London said: “We should be asking employers, what would you rather go for? A scheme that is up and running with proven administration, investment links and choice to members or a scheme that is starting from scratch and one day has no members and the next day has 7 million members, brought to you by the same people who brought you the Child Support Agency? We should play to our strengths.”