INVESCO has applied to regulators for permission to launch a life office to enable a full service en...
INVESCO has applied to regulators for permission to launch a life office to enable a full service entry into the defined contribution group pensions market.
The company, which plans to offer a range of INVESCO-branded DC products, is gearing up for the launch of stakeholder in April 2001. INVESCO joins investment groups such as HSBC, which is planning to relaunch one of its two dormant life offices, Schroders' which has just paid £60m to buy Liberty International Pensions, and Perpetual, which launched a life company last year.
The moves are seen as evidence that investment management firms are growing impatient for the Pooled Pensions Investment (PPI) proposals from the Treasury and are seeking to circumvent the process by going down the life company route.
PPI's are proposals for product wrappers that would allow investment management firms to provide pension products such as stakeholder without the need for a life office.
The Treasury timetable is for PPI's to be introduced with stakeholder and it intends to contact industry leaders in June to finalise details of the plan in order to allow business time to prepare.
Autif, which has pushed hard for the wrapper, does not believe the latest moves indicate the industry is no longer interested in PPI, although it does recognise that now is a critical time for investment management offices to prepare for the launch of stakeholder in April 2001.
Richard Haw, director of Schroders investment management UK, said that in order to prepare for the strict 1% charging regime of stakeholder it is essential companies move now.
Haw, who is to become chairman of Liberty International Pensions when it is rebranded under Schroders' name, said: "At the moment PPI is only an idea, and until you can see how it works, and then see whether or not the market accepts it, I think you are better off being in the market using vehicles the market overall prefers. It is a stronger position than sitting on the side lines."
Alasdair Buchanan, head of communications at Scottish Life said PPIs already looked dead in the water. He said: "You will see a lot of companies like INVESCO, which are a long way down the route of setting up their own life operation in order to give them access to this market, and you will come to the stage that there is no point in having PPIs at all."
Nigel Hewett, investment marketing director at AIG, agreed and said: "There is a lot of talk that the big life companies are going to buy their way into the stakeholder market by selling loss leaders and make a loss for more than 10 years. The fund management businesses are coming in intending to trade on their investment performance. It is difficult to see how the likes of Perpetual can match the likes of Standard Life."