Round zero in the pensions price war

The pensions price war hotted up this week as both Barclays and the Prudential announced they were cutting charges in the lead-up to the launch of stakeholder pensions next April.

The pensions price war hotted up this week as both Barclays and the Prudential announced they were cutting charges in the lead-up to the launch of stakeholder pensions next April.

Barclays made the most dramatic move by offering a zero per cent charge on its stakeholder pension for the first year. After December 2002 both personal and business customers will revert to a tiered annual management charge of between 0.25 per cent and one per cent, depending on the customers' fund size.

Separately, Barclays is cutting charges for its existing 400,000 personal pension, retirement annuity and FSAVC customers to stakeholder levels from 1 April next year. The Government has designed stakeholder products to be as cheap as possible, with a maximum 1 per cent annual management fee.

The Pru, the largest player in the retirement market, is bringing all its 1.2 million personal pension customers into line with stakeholder charges from next April. Alan Cook, chief executive for insurance services at the Pru, says: "This brings us much closer to the 'one per cent world'. You will pay the same premiums, but the cut in charges means your pension fund will end up bigger." Both Barclays and the Pru will write to all pensions customers about the changes. For information from Barclays, call 0845 603 5000. For the Pru call 0845 71 00 000.