Time called on the Man from the Pru

SENIOR executives at Prudential, the UK's biggest life insurer, are considering stripping its 3,000-strong direct sales force of one of its core products - personal pensions.

A review, at a meeting last Tuesday, was prompted by John Elbourne, chief executive of Prudential Retail Financial Services, according to insiders.

Mr Elbourne is worried that the commission structure required to motivate the sale of small-scale personal pensions might alienate customers, insiders said.

Another reason for the review is that the sale of personal pensions by staff visiting customers' homes is difficult for the company to monitor.

Prudential has been caught up in the pensions mis-selling scandal that resulted from salesmen putting inappropriate pressure on customers of modest income to transfer out of state pensions into private pensions.

Initially, the Pru resisted government efforts to hold insurers responsible. After agreeing to co-operate, it set aside pounds 1.lbn to cover potential liabilities. Last year, it increased that provision by pounds 84m, according to its annual report last week.

"The days when the man from the Pru comes round, collects a penny a week for your pension, and puts a ha'penny of that in his pocket are gone," said a senior industry executive. "New Labour's plan to make financial services transparent calls into question the economics of what the Pru has been doing on the personal pensions front for 150 years."

The Government's pension reforms, due to be introduced in 2001, will revolutionise the UK pensions industry. All workplaces without a pension scheme will have to offer a "stakeholder" policy to employees. These pensions will be aimed at middle earners and will be transparent and totally flexible. Charges are likely to be capped at 1 per cent a year.

The Prudential's direct sales arm is likely to suffer particularly badly under the changes, because it has an older, downmarket customer base. The Pru sells pensions to more up-market customers through Scottish Amicable, which sells policies only through independent financial advisers (IFAs).

The Pru's new banking opertion, egg, is aimed at the young and affluent and is sold by phone and over the internet. A spokeswoman denied it would be selling pensions in future, but the brand is expected to expand its range of banking and investment services.

Kevin Russell, the Pru's senior press officer, denied the company had any plans to drop the sale of personal pensions.

The Pru has made it clear, he said, that in the event of the implementation of government reforms on personal pensions, no one taking out a pension from the company from 1 January will lose out. He further denied the company had any plans to trim its direct sales force.

The Tuesday meeting of senior Pru executives reviewed millennium bug issues as well as the company's methods for selling personal pensions, according to an insider who saw the agenda.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Day In a Page

War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable
Living with Alzheimer's: What is it really like to be diagnosed with early-onset dementia?

What is it like to live with Alzheimer's?

Depicting early-onset Alzheimer's, the film 'Still Alice' had a profound effect on Joy Watson, who lives with the illness. She tells Kate Hilpern how she's coped with the diagnosis
The Internet of Things: Meet the British salesman who gave real-world items a virtual life

Setting in motion the Internet of Things

British salesman Kevin Ashton gave real-world items a virtual life
Election 2015: Latest polling reveals Tories and Labour on course to win the same number of seats - with the SNP holding the balance of power

Election 2015: A dead heat between Mr Bean and Dick Dastardly!

Lord Ashcroft reveals latest polling – and which character voters associate with each leader
Audiences queue up for 'true stories told live' as cult competition The Moth goes global

Cult competition The Moth goes global

The non-profit 'slam storytelling' competition was founded in 1997 by the novelist George Dawes Green and has seen Malcolm Gladwell, Salman Rushdie and Molly Ringwald all take their turn at the mic
Pakistani women come out fighting: A hard-hitting play focuses on female Muslim boxers

Pakistani women come out fighting

Hard-hitting new play 'No Guts, No Heart, No Glory' focuses on female Muslim boxers
Leonora Carrington transcended her stolid background to become an avant garde star

Surreal deal: Leonora Carrington

The artist transcended her stolid background to become an avant garde star
LGBT History Month: Pupils discuss topics from Sappho to same-sex marriage

Education: LGBT History Month

Pupils have been discussing topics from Sappho to same-sex marriage
11 best gel eyeliners

Go bold this season: 11 best gel eyeliners

Use an ink pot eyeliner to go bold on the eyes with this season's feline flicked winged liner
Cricket World Cup 2015: Tournament runs riot to make the event more hit than miss...

Cricket World Cup runs riot to make the event more hit than miss...

The tournament has reached its halfway mark and scores of 300 and amazing catches abound. One thing never changes, though – everyone loves beating England
Katarina Johnson-Thompson: Heptathlete ready to jump at first major title

Katarina Johnson-Thompson: Ready to jump at first major title

After her 2014 was ruined by injury, 21-year-old Briton is leading pentathlete going into this week’s European Indoors. Now she intends to turn form into gold
Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot