NPI has started to actively target trustees of occupational pension schemes with an AVC product that...
NPI has started to actively target trustees of occupational pension schemes with an AVC product that offers socially responsible investment options.
Steve Ingledew, director of consumer marketing at NPI, said interest in the product, which was launched in January, has been strong from the voluntary, charity, local authority and plc sectors, all of which are becoming more socially aware and publicity sensitive.
The AVC is being marketed through national IFAs and employee benefit advisors.
Ingledew said: "We are generating interest in the socially responsible investment aspects of the product, which is of growing importance to people interested in an AVC."
It is an area where there are few competitors, but one that is increasingly important. From July new Government accounting rules will force pension scheme trustees to develop a policy on socially responsible investing, and disclose it in their annual literature.
Now that the Government has indicated stakeholder schemes will not be available to savers who already hold a final salary scheme, Ingledew said a move into the AVC market is well-timed as demand grows.
He said the flexible aspects of the charging and commission structures available on the product were also drawing a lot of interest from intermediaries.
There is a menu of commission structures available to IFAs, including a 3% flat rate, or the option for fee-based advisors of zero commission. Commission structures could also be negotiated to suit introducer's needs.
Contributions to the scheme, intended for groups of five or more employees between the ages of 16 and 75, are made by the employer after deducting the amount from the employee's salary up to a maximum of 15% of total gross earnings per annum with an earnings cap of £90,600 for 1999/2000. Single one-off contributions can also be made on the AVC.
The scheme comes with three investment options, a unitised with-profit account, a capital account, and a unit account. Assets can be switched between the three accounts, with no minimum, once every policy year free of charge. Subsequent switches are charged at £15 per scheme member.
Retirement benefits can be taken as a monthly income, which can be guaranteed for a set period with payments continuing to a designated dependent upon death of the scheme member.
An index-linked pension is also available as long as the amount does not exceed the maximum, which could have been provided under Pension Scheme Office rules when payment began, the pension increases in line with the consumer price index.
The AVC is being targeted at large companies, local authorities and charities.