Call to clear up 'advice' on pensions

THE reluctance of providers to talk about how pensions are 'sold' is adding confusion to government plans to introduce its stakeholder scheme, says one of the largest providers of pensions products in the UK.

Scottish Equitable, part of the giant AEGON group, believes the negative connotations associated with the phrase in recent years has fuelled confusion over different interpretations, in particular whether 'advice' includes the 'selling' and promotion of pensions. It believes if a significant take-up of stakeholder pensions among those who currently have no private pension is to happen, then in the absence of increased compulsion, there must be pro-active selling and promotion.

Stewart Ritchie, director of Pensions Development at Scottish Equitable, said: "We believe that there are widely differing interpretations of what 'advice' actually means. Pension promotion should educate individuals of the merits of providing for their own retirement and demonstrate how state pensions are not adequate in isolation. For many, and we believe most, this message is only successfully delivered if given one to one, ideally face to face. "Once the individual understands the need for a private pension there is still a hurdle to be overcome in persuading that individual to take action - which will involve giving up current income. The target group for stakeholders will by definition have very little disposable income - making persuasion all the harder. "The public need educated on how to provide for themselves. This won't happen without the active involvement of the private sector, which can't operate within a cap on charges of 1%." Scottish Equitable, the third largest listed insurer in the world, manages funds in excess of #20 billion and is one of only seven insurers in the UK to have been awarded the "AAA" rating of financial strength by Standard & Poor's.

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