Eagle Star takes on Virgin with cheap pensions

Eagle Star, the insurer owned by tobacco giant BAT, yesterday opened another front in the escalating war over cut-price financial products by launching a personal pension it claimed was more competitive than any of its rivals, including Virgin.

The company argued that its pension was among the easiest to understand, had clear charges and involved no foot-in-the-door sales tactics.

Its new product comes ahead of a report tomorrow by the Personal Investment Authority, the regulator, which will examine the effect of company charges and expenses on financial products.

The PIA report is expected to show that in the two years since rules were introduced to force greater disclosure of charges, their impact has been limited.

Eagle Star's pension comes in the wake of a series of similar product launches, mostly aimed at a growing number of people who prefer to do business by telephone.

The company will charge a fixed pounds 2 a month on the fund itself, plus an annual management charge of 1 per cent. Unlike other firms, which operate a so-called "bid-offer spread" of charges of about 5 per cent, all contributions are immediately allocated to the fund. Both these innovations are identical to those on offer from Virgin Direct, the growing financial services empire owned by airline tycoon Richard Branson.

Martin Campbell, product development manager at Virgin Direct, said: "It is good to see so soon after our pension was launched that other companies are trying to compete with us."

Eagle Star breaks new ground, however, by promising potential policyholders that if in the first two years they are unhappy with the pension, it will transfer the money to a pension scheme of their choice, without charge.

Steve Roberts, director of Eagle Star's new operation, said: "The personal pensions market has for too long been haunted by the dual problem of unclear charges and a high drop-out rate in early years.

"Our guarantee, together with the freedom to suspend contributions without penalty, means that early-surrender problems should be a thing of the past."

Eagle Star's launch reflects its determination to reclaim the initiative after several years of sluggish financial sales. The company recently installed a pounds 55m computer system. It has also cut staff by 30 per cent to about 1,500 people.

The company hopes to attract consumers jaded by traditional hard-sell tactics or opaque products and increasingly attracted by cheap, no-frills financial products.

Other companies to have entered the market include Scottish Widows, which saw telephone-based sales account for more than 20 per cent of its pension premium income last year.

The new launches aim to compete with Equitable Life, which has for many years offered some of the cheapest products on the market.

Its pension has no monthly fee and, although it imposes a bid-offer charge of between 4.5 and 5 per cent to meet setting-up costs, the annual management charge is 0.5 per cent, half the rate that Eagle Star imposes on its new pension.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Brendan O'Carroll as Agnes Brown in the 2014 Mrs Brown's Boys Christmas special
tvCould Mrs Brown's Boys have taken lead for second year?
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
News
news
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
i100
Arts and Entertainment
tvChristmas special reviewed
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all