"Guidance Notes on Approval of Personal Pension Schemes (including Stakeholder Pension Schemes)"

This new draft, on which the Revenue is consulting the industry up to 28 July, incorporates new material covering the introduction of stakeholder pension schemes and pension sharing on divorce, as well as new legislation on income withdrawal. Following the transfer of supervision of contracting-out from DSS, a very lengthy new part on this subject is also included. The accompanying short Revenue commentary makes the point that other changes have been kept to a minimum, ostensibly to avoid confusing people used to the 1999 edition.

The Government has announced its decision: any occupational scheme (DC or DB) member who earns no more than £30,000 pa and who is not a controlling director will be allowed to contribute to a stakeholder scheme as well. This corresponds quite closely to what the industry wanted, given the Government's determination that full concurrency was not an option. It is perhaps disappointing nonetheless that the Government did not set the threshold more flexibly and at the level of half the earnings cap (ie currently £45,900) as used elsewhere in the draft accompanying regulations.

Whether the 10% or so of OPS members who will be excluded from stakeholder constitute a viable market for FSAVCs will probably determine the future of the FSAVCS. This must be doubtful, even if FSAVC contracts are redesigned along similar lines to stakeholder. A significant part of this top end of the market (eg controlling directors) is in any case ineligible for FSAVCS membership. For the other 90%, SHPs are likely to be the first recommendation - if the client wants to invest in additional pension provision rather than, say, ISAs.

AVC arrangements, on the other hand, may survive especially in schemes where the employer is exempt from stakeholder access. One question yet to be answered is whether the law requiring all OPSs to offer an AVC facility will remain.