For Immediate Release: Thursday 15 June 2000

AUTIF CHAIRMAN QUESTIONS GOVERNMENT PRICING INTERVENTION

Alan Ainsworth, Chairman of the Association of Unit Trusts and Investment Funds (AUTIF), in a speech following the Association’s Annual General Meeting, urged Alastair Darling MP, Secretary of State for Social Security, and his Government colleagues in due course to review their proposal to introduce a 1% cap on stakeholder pensions.

Mr Ainsworth stated that the success of PEPs and ISAs had already shown that high selling costs are unnecessary if investors are positively attracted to products. The lack of a contractual lock-in acts as a powerful discipline to fund managers who recognise that performance and service are the only ways to retain clients.

He said:

"Stakeholder seems to be one of the very few instances in which Government interferes in the prices of products, other than when a monopoly is present. I would urge the Secretary of State to monitor carefully the development of the stakeholder market and to remove the price cap as a matter of principle, at the earliest opportunity."

AUTIF’s Chairman went on to comment that the 1% cap on stakeholder pensions offered little or no headroom for the provision of advice at the point of sale. He pointed out that:

"…advice, which will grow in importance over the years, will be less about the decisions whether or not to invest in the stakeholder pension and more about how to invest the money…"

For further information please contact:

Alan Ainsworth, Chairman, AUTIF - +44 (0)20 7464 5739
Philip Warland, director General, AUTIF - +44 (0)20 7831 0898
Anne McMeehan, Director of Communications, AUTIF - +44 (0)20 7831 0898
Clare Arber, PR Manager, AUTIF - +44 (0)20 7831 0898

Notes to Editors:
In the US, when 401k pension plans were first introduced, the average total expense ratio was 2.2%. This has now fallen to 1.7%, significantly higher than the proposed UK figure, in spite of the massive economies of scale enjoyed by the US mutual fund industry.

Attachment - Chairman's Speech (in PDF Format)