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&#39Stakeholder will fail without advice&#39

The LIA claims stakeholder will fail to reach its target audience without the involvement of advisers.

In its response to the FSA&#39s recent draft rules and regulations, it says stakeholder is unlikely to encourage many individuals at the lower end of the savings market to take personal responsibility for retirement provision.

The LIA believes stakeholder will just replace some small occupational schemes.

The trade body believes plans for reasons why not letters to explain why stakeholder has not been chosen are too “rigid” and it is demanding a less prescriptive approach.

Public affairs director John Ellis says advisers are needed to confront people with the reality of their financial situations.

The LIA calls for the FSA to conduct research on what influences bring about voluntary saving for retirement. It expects that any research will point to advice as the main driver.

It is also looking at the next stage in the “evolution” of the UK pension system. For state pensions, the LIA advocates a scheme proposed to the DSS by the Federation of Small Businesses.

The scheme would run as a second tier to the basic state pension and be based on National Insurance contributions invested in a mutual with-profits fund.

The LIA says this would mean returns would be unaffected by changes in Government policy.

Ellis says: “We have to accept there will be a low-cost product but we must realise it is only one solution. The controls imposed by the regulator which say stakeholder is better than anything else should be lifted. People should be given the choice.

“Pension planning is most effective when it is handled in the context of a long-term, trusting client/adviser relationship.”

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