L&G in small firms stakeholder deal

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The Independent Online

Legal & General, the insurance group, yesterday increased pressure among rivals in the stakeholder pension market by launching a product aimed at people working in small businesses, the heart of the potential stakeholder market.

Legal & General, the insurance group, yesterday increased pressure among rivals in the stakeholder pension market by launching a product aimed at people working in small businesses, the heart of the potential stakeholder market.

L&G said it will provide pensions for up to 350,000 people who belong to the business group, the Forum of Private Business (FPB), when stakeholder pensions launch in April.

Insurance companies agree that profit from stakeholder pensions, which will have capped costs of just one per cent per annum, will depend on capturing as much of the market as possible.

Last month Prudential announced plans to offer stakeholder pensions to the 6 million eligible members of the TUC. L&G has agreements with other industry bodies, including the British Printing Industry Federation. It has said it wants to gain 10 per cent of the stakeholder market, which it estimates at 8 million people in total.

L&G also plans to offer other financial products at a discount alongside its stakeholder pensions. The move follows US methods of motivating people to save for retirement under 401K plans, and is designed to make the stakeholder scheme more profitable for the provider.

Under L&G's agreement with the FPB, members whose companies take the offer up will have access to insurance and investments such as ISAs at discounts that could be as much as 25 per cent. An L&G spokesman yesterday denied that the plan would create losses for the company, although he said stakeholder pensions are generally accepted as profit-making only in the medium-term.

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