M&G hopes to cash in with the simple pension

M&G is switching its focus towards pensions, which it believes will be the main growth area for financial services companies in the next five years.

It has launched a new range of pensions designed to be more transparent in their charging structure than those of its rivals.

Since 1 January all pension providers have been forced to reveal the proportion of investors' premiums that are swallowed by charges. This has led providers to trim costs and simplify the structure.

Peter Emms, M&G's sales and marketing director, said: "What you see is what you get.'' The whole amount of their contributions will be credited to customers' accounts and then charges deducted. Investors will be able to see at a glance what they have paid in and what has gone out in charges.

"There are no capital units and no illusory or projected bonuses that can disappear,'' Mr Emms said.

There is a penalty for transfers within the first two year, but after that period the full fund value can be taken elsewhere. Investors can increase, decrease or suspend contributions without penalty as long as the fund has built up to a minimum of £500.

M&G has about1 per cent of the pensions market One of Britain's largest pension providers, Prudential, has already altered its pensions to make them more flexible and easier for investors to understand.

Other pension providers have responded to the new requirement to show all costs and commission payments by shaving their margins, but not necessarily making the pension any simpler.

Investors' initial enthusiasm for personal pensions has waned as the publicity over the mis-selling of schemes has gathered pace. Thousands of people who would have been better off staying in a company scheme were persuaded to take out a personal pension.

Insurance companies have been ordered by the Securities and Investments Board to review their pensions, and this could lead to compensation payments of some £2bn.