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71% Of people contracted out will be worse off, says Which??

It has sent its findings, based on scrutiny of 108 individual cases, to Pensions Minister Stephen Timms and the FSA, calling the situation “a scandal”.

Which? claims it found that 71 per cent who contracted out will only get 80 per cent of what they would have got if they had stayed contracted in.

Editor Malcolm Coles says he is particularly aggrieved that the Government has paid out 35bn in rebates to pension providers, with around 3bn of this absorbed by providers and advisers in fees, despite their poor performance.

The study found people aged over 50 are most likely to have lost out, with only one in 22 in that age bracket on target to get a better pension than they would have by remaining contracted in.

Coles says the worst cases are those where individuals contracted out after 1997 when rebates became age-related. He says the findings represent a huge abdication of respon-sibility from the Government and the pension industry and is the latest in a string of pension scandals.

The Gaeia Partnership adv-iser Olivia Bowen says the industry’s consensus is that people should contract back in but the lack of leadership on the issue by both the Government and the FSA makes it difficult to give advice.

She says: “We are trying to advise people on a long-term planning issue when we do not know what Government legislation lies ahead.”

Coles says: “It is high time that the Government gave us some clear direction on opting out before millions lose out.”


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