Group Pension Investment Service (July 2010) |
Publications -> Newsletter Articles
Do you operate a Group Personal Pension arrangement?
Over the past two decades, the UK workplace has witnessed occupational pension provision steadily migrate from arrangements providing guaranteed benefits (defined benefit schemes) to provision based on investment and deposit based returns (defined contribution schemes).
The reasons for this shift are well documented, with the key factors including demographic trends and increased mortality. Furthermore personal pension plans, since their introduction back in 1988, have been widely adopted and form a very significant part of the landscape.
Similarly Group Personal Pension arrangements have gained in popularity. Indeed, employers have found them to be an attractive solution and an important tool in controlling the cost and regulatory requirements of company sponsored pension provision.
With volatile markets and low interest rates, members of GPP’s are recognising the need to take a far greater interest in the underlying investment content of their pension arrangements. Members are keen to establish the true value of their pension at retirement and also whether the underlying pension funds selected will ultimately still meet their needs.
Many individuals have now accumulated funds of significance, either in a current scheme or collectively with schemes from previous employment. As a result, there is a real need for individuals to consider the merits of consolidation, whilst at the same time receiving investment advice.
It is also fair to say, in our experience the majority of Personal Pension scheme members lack the knowledge and confidence to make investment decisions unaided and consequently many members remain rooted to the funds that they chose at the plan inception.
Individual circumstances, perceptions of risk or retirement objectives may well have changed over time and with no access to an ongoing review process, members may well find that at retirement they have been invested in funds no longer compatible with their circumstances. Unfortunately for some, recognition of this situation may come too late to make effective alterations.
When Group Personal Pensions were launched back in 1988, some arrangements had as few as 5 funds to choose from - it is now not uncommon to have a choice of over 250 funds!
The need for advice
For members of GPP’s, obtaining adequate investment advice can prove easier said than done. Historically, many schemes have been set up without the provision of advice, with the member simply placed automatically in the “default” or “Life Style” fund option.
Whilst the individual may be provided with material about their investment choices, lack of supporting advice can mean the member has insufficient information upon which to make an informed decision. Consequently, funds which prove incompatible with an individual’s investment risk profile could result in a shortfall at retirement and fail to meet expectations.
A significant number of employee benefit providers do not offer advice led solutions at the core of their proposition. Nevertheless, as investment advice is regulated, human resources departments would do well to steer clear of providing any sort of advice in this area.
Whatever the reason, there is certainly an increased desire by many Group Personal Pension members to receive advice and guidance on their investment choices.
Group Pension Investment Service (GPIS)
Cartlidge Morland offers an advice driven solution along with its unique Group Pension Investment Service.
The GPIS provides tailored portfolios, designed to match an individual’s stated attitude to risk, together with an effective method of review and portfolios that are rebalanced every 6 months.
The service is delivered electronically along with access to a qualified adviser thereby helping scheme members to fully appreciate and understand the value of their personal pension and its underlying investment assets.
For further information on whether the GPIS would be effective for your scheme please contact Cartlidge Morland for an initial consultation.
Cartlidge Morland is an independent employee benefits consultancy. We provide benefit services to a wide range of partnerships, family companies, PLCs, charities and governmental organisations. We also provide financial advice to private clients, investment management and mortgage broking services
Phone us on 020 7709 5560 or complete the online contact form
