Norwich Union has been reviewing its individual pensions strategy throughout 2004 to see how it needs to develop and refine its product range and pricing strategy to respond to the changing market dynamics.
Norwich Union has been reviewing its individual pensions strategy throughout 2004 to see how it needs to develop and refine its product range and pricing strategy to respond to the changing market dynamics. Following the Treasury announcement in June, of a stakeholder price cap at 1.5% pa* from April 2005, together with a proposed basic advice regime, Norwich Union is now in a position to confirm its approach to individual pensions within this new framework.
Norwich Union believes that the new charging structure for stakeholder pensions should be able to support the proposed basic advice process. However, despite the increase in the price cap the company does not see this new charging structure as being sufficient to fund the full financial advice process for lower premium business.
Norwich Union is a strong advocate of financial advice for people looking to plan for their retirement. To cater for customers who wish to seek full financial advice on pensions, the company will be launching a new ‘non-stakeholder’ pension product in early 2005 with a charging structure designed to support the provision of full advice. This new product will offer greater choice than stakeholder, including a wider range of funds.
To reflect the lower level of advice and costs of the basic advice regime on stakeholder pensions, Norwich Union is reducing the levels of commission on regular premium individual stakeholder priced pensions, by two thirds. The changes are effective from 4 October 2004. Group stakeholder pension products will remain unchanged.
Norwich Union intends to keep a strong foothold in the individual pensions market but its main focus will continue to be the group pensions market.
The charging structure for existing Norwich Union stakeholder customers remains unchanged.
Commenting on the changes, Peter Hales, sales & marketing director, said: "We believe that financial advice is essential to encourage people to save and therefore help the pension market grow. While the new stakeholder pension cap should support the basic advice process, it will not be sufficient to fund full advice for lower premium business. To ensure that we cater for the full advice market we will be launching a new "non-stakeholder" pension early in 2005 with a charging structure designed to support full advice.
"The commission changes we are making reflect the lower levels of advice and costs of the proposed basic advice regime but at the same time will ensure that Norwich Union’s individual stakeholder pensions continue to be available."
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Notes to Editors
* From April 2005, stakeholder pension charges for new policies will be a maximum of 1.5% p.a. for the first 10 years and then a maximum of 1% p.a. thereafter.
- Norwich Union is the UK's largest insurer. It is the UK's largest provider of life, pensions and investment products and one of the leading IFA providers. IFAs provide around 75% of the company's long-term savings business in the UK. Norwich Union has strategic alliances with building societies and other leading UK brand names including Tesco Personal Finance and The Royal Bank of Scotland Group. Norwich Union’s news releases and a selection of images are available from Aviva's internet press centre at www.aviva.com/media