Cautious firms dip toe in pensions water

UNIT trust managers, although authorised to provide pensions, have so far shown little enthusiasm to do so. Some of the larger managers own life assurance companies, the traditional providers of pensions, and see no reason to take business away from them.

Government efforts to persuade individuals to provide more for themselves in their old age and the gradual move away from final salary to money-purchase schemes could persuade more unit trust managers into the field.

At the moment only Gartmore and Rothschild Asset Management offer individual personal pensions and Fidelity is targeting the corporate market.

In April this year it launched Fidelity Pensions Plus, which includes a group money purchase service, grouped personal pensions under a corporate umbrella and an additional voluntary contributions (AVC) arrangement. Building on more than 10 years experience in the US, Fidelity believes its product goes beyond other money-purchase schemes in the UK, because it can be adapted not only to the employer's needs but to those of the employees.

The emphasis is on flexibility and customised service. David Calfo, a director of Fidelity Pensions Management, says the ultimate client is the individual member. Employees receive a programme of education and access to a telephone hotline, for up-to-date valuations of accounts, arranging transfers and answering questions.

Mr Calfo says companies like the charging structure as it is straightforward and represents a cost saving from what they were used to. The investment is in a possible 26 unit trusts and managed funds ranging from high risk international equities to low risk cash and bonds.

Gartmore and Rothschild both stress the transparency of pricing and lower charges of unit trust pensions compared with traditional pensions from life companies. There is also greater flexibility to suspend or reduce contributions, transfer to another scheme or change retirement dates, all without penalty.