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			Prudential Group Pensions Group Pensions forms an increasingly significant part of Prudential's business. We are a leading provider of employer sponsored pension schemes, meeting the pension needs of many large companies. We administer 3,200 defined contribution schemes with a total of some 400,000 members, and 275 defined benefit schemes comprising some 130,000 members. During 1999, Group Pensions' statutory profit rose 64 per cent from £22 million to £36 million while new business achieved profit was up 30 per cent to £26 million. The Government's proposal to introduce Stakeholder Pensions in 2001, and in particular the limiting of fees to a one per cent annual management charge, offers both a major challenge and a significant opportunity. The challenge for providers is to develop more economic methods of servicing and distribution. At the same time, the growth of this new Stakeholder market, together with the continuing shift towards flexible defined contribution arrangements, offers Group Pensions an opportunity to deliver significant shareholder value through simple, value-for-money products and services. Prudential's response to the Government proposals has been positive: we aim to combine first class customer service with operating efficiencies to make Prudential a low-cost and profitable participant in the emerging Stakeholder environment. Two specific initiatives have been taken to exploit these market changes: - a marketing and distribution platform has been developed, that employs current e-commerce and future broadband technology to its fullest advantage. Designed to maximise participation by giving employees access to pension information through their company's intranet and at home, it has the added benefit of providing a strong education capability to enable users to understand and manage their pensions better; - secondly, we have improved the distribution efficiency of our Additional Voluntary Contribution (AVC) product by moving away from one to one sales to a new approach based on communication teams visiting the workplace and informing members of the pension choices available to them. This strategy reinforces our move away from the traditional 'sell' approach to a 'buy' service that complements our e-commerce proposition. Going forward, these and other initiatives build on Prudential's already highly respected brand and will enable us to capitalise on market changes, to deliver both customer value and strong shareholder returns.