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&#39Decision trees will turn away over-40s&#39

Providers and IFAs have blasted the FSA&#39s decision trees for actively

discouraging the over- 40s from saving.

At the heart of the problem is the minimum income guarantee, the

means-testing Government benefit, which guarantees a certain income in

retirement and which, unlike the state pension, is linked to earnings.

Providers believe the Mig has effectively forced the FSA to insert a

clause in the trees warning the over-40s with little savings that they may

not need to bother taking out a stakeholder pension.

Experts fear the FSA&#39s claim will exclude many of the Government&#39s

potential stakeholder target market from making pension provision.

Providers and IFAs are calling for an urgent reappraisal of benefit so

people can take out a stakeholder confident that they will not be penalised

for saving when they retire.

The FSA says: “Particularly if you are over 40, have little pension or

other savings and cannot afford to save much, the little you are able to

put into a stakeholder may not be enough to bring your total retirement

income above the Mig. It would then be wasted.”

Scottish Equitable pensions development manager Steve Cameron says: “What

the FSA is saying is absolutely true and valid under stakeholder rules. But

I cannot see the Government allowing the FSA to take such a direct swipe at

its flagship pensions initiative by scaring off such a significant chunk of

its target group.”

Winterthur Life technical support manager Mike Morrison says: “The

Government must change the way stakeholder interacts with the Mig or find

alternative ways for people to get better value from their savings.”

Perspective, p24;

Decision trees, p36

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