Corporate Pensions and the emphasis on Scheme Retention

In many cases we’ve been told that the highly competitive nature of the product market means new business acquisition is not economically viable for many of the large product providers, thus leaving them to focus on client retention and making further profits from existing clients.  Many companies have created a separate Corporate Pensions Division and even the name ‘Pensions’ is often replaced by ‘Retirement Savings’.
The types of people being sought are those who are used to managing
relationships with employers, rather than with Corporate IFAs and Employee Benefit Consultancies (EBCs).
Most companies are very focused on defence of the existing pension’s
estate.  They are conscious that Employee Benefit Consultancies are seeking future income streams and in many cases are recommending to employers that they move business away from the traditional providers.  In the words of the Director of one major Pension Office, “It’s not quite Zulu Dawn out there but not far off!”  Like a lot of major Pension Offices, he was seeking someone to create a Corporate Client Retention team in order to maintain their position in the market.
The problem is that most companies have been focused on generating new corporate business from Corporate IFAs and Employee Benefit Consultancies for many years.  They are operating in both the bundled and unbundled markets and have adapted their offering well but have in many cases relied on commission payment to protect their position.
RDR effectively means the end of commission and thus creates a level playing field with factory gate pricing on all products.  The product providers face the uncomfortable truth that many of their Schemes which they paid so heavily for to win in the first place will be under attack from Intermediaries and EBCs keen to prove their worth to the end clients. In the words of one senior manager “It is time to circle the wagons and defend ourselves”.

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