Case study

At a Board meeting the marketing director presents a business case for introducing a new pension term assurance product. She explains that with changes to the pension tax legislation on A-Day, the sale of stand-alone pension term assurance is expected to increase. Firm T's Board of Directors want to find out whether they and their customers can benefit from the wider availability of such products, and ask their actuarial department to look into this. The firm's actuaries confirm that pension term assurance is a type of term assurance which is sold under pension taxation rules and, under current legislative arrangements, pension term assurance premiums benefit from tax relief. They also establish that the tax relief may allow Firm T some scope to offer a more competitively-priced term assurance product for certain customers as compared to its current offering. The Board is also concerned that, if Firm T does not offer a pension term assurance product, it may lose some customers to firms who do. So the Board sets up a steering group to report to it at regular intervals to consider the case for and against launching a new pension term assurance product. It asks the group to specifically consider the risks of providing such a product in particular, the product design and its distribution through the firms own distribution channels and how these risks can be mitigated. The steering group is part of Firm Ts new product approval process, which it enhanced last year to ensure that TCF is explicitly considered.