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Advisers urged to push waiver and life cover

IFAs are being urged to jump- start the pension market with a buy now

while stocks last campaign, pushing waiver of premium and life cover before

stakeholder restrictions apply.

Providers believe IFAs can take advantage of the changes to boost the

flagging personal pension market.

From April 2001, life cover under pensions will be restricted to 10 per

cent of the premium. But by buying a personal pension or a pension term

insurance policy now, policyholders will be able to take out or increase

life cover on the present basis both now and in the future.

This allows them to base their premiums on up to 5 per cent of relevant

earnings.

Under stakeholder, tax relief will be lost on waiver premiums. But, by

taking out a plan now, policyholders will get tax relief on the current

basis both now and in the future.

IFAs are advised to keep their clients&#39 options open by recommending they

take out a plan under the present pensions rules even if the additional

benefits are not used until future years.

Clerical Medical pensions strategy manager Nigel Chambers says: “Plans

taken out now offering rights to waiver or life cover on current tax terms

could prove to have a valuable advantage.”

Scottish Life head of communications Alasdair Buchanan says: “This is a

good opportunity for IFAs to talk to people about doing something now as

they can get greater benefits under current rules.”

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