Perpetual to move into group market
Perpetual's life office is getting set to enter the group personal pensions market in time for the l...
Perpetual's life office is getting set to enter the group personal pensions market in time for the launch of stakeholder.
The group hopes to launch a product prior to April 2001, and possibly by year end as stakeholder pension products can be registered with Opra starting from October 2000.
Perpetual plans to enter the defined contributions market with a GPP and a money purchase occupational product. Fiach McGuire, pensions director at Perpetual, said as the group believes stakeholder is little more than a Cat-marked GPP, it did intend to have a Cat marked element to its product.
The group will target employers who contribute to an employee scheme and will likely focus on the more sophisticated employers as its products will make use of electronic administration. Communication with trustees and members will be via extranet services.
The fund management group, which launched its life arm in February 1999, hopes to achieve £100m in assets by the year end. So far it has entered the pensions market with a personal pension product aimed at the higher end of the market and a trustee investment plan (TIP). It has around £80m in assets.
McGuire said: "The personal pension has attracted the attention of the better off end of the market. Around 12% of the professional personal pensions are IFA business. We have not been surprised that we are attracting professionals, although we have been surprised at the amount of single premium business we have been doing."
Half of the business the group's personal pension is attracting is in single premium top ups, which are averaging £8,000 each. Its regular premium business averages contributions of £250 per month.
The TIP product has been focused on the Sipp and SSAS market and the group is currently planning to run a sales campaign aimed at promoting the product to IFAs. Perpetual plans to target IFAs with roadshows and workshops on its TIP product.
As part of that the group has been participating in the multi-provider workshops being hosted by Investment Week, taking place this week in Edinburgh, Birmingham and Manchester.
The group is highlighting the investment message that UK pension funds are too heavily weighted in domestic equities, which has been detrimental to performance. The average pension split of 70% in UK and 30% overseas should be more along the lines of 60% to 40%, McGuire said. He added: "Currently that is the investment split on our Global pension fund and we may soon move to a 50-50 split. The benchmark hugging approach by pension fund managers has created an imbalance and proportionately scheme members have more assets invested in Vodafone than they do the entire US market and that is risky."
Perpetual's UK pension fund has gone through a period of underperformance recently as a result of being underweight in the telecoms, media and technology sectors. McGuire said: "The performance has come back since market volatility has caused these stocks to go out of favour.
He added: "It is not that we are against new economy stocks, we are just not keen on the UK element of it, where there is little choice in stocks."
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