Blight at the end of the tunnel

Uncertainties surrounding RU64 continue to be a thorn in the side of pension planners.

Life offices are calling for the PIA to clarify RU64 before the introduction of stakeholder to try to bring the pension planning blight to an end.

ABI figures for the second quarter of the year reveal regular-premium pension sales have dropped by 25 per cent to 197,000 from 262,000 and the sale of individual pension policies has fallen by 12 per cent to 301,000 from 339,000.

Industry figures put much of the blame for this drop in sales on IFAs&#39 concerns about the consequences of selling products before stakeholder.

Scottish Equitable marketing director Ken Hogg says:”I suspect the reluctance is on the supply side. RU64 was not particularly clear and I think IFAs and tied agents are concerned. The ABI has tried to clarify the situation but it is the regulator that regulates us, not the ABI.”

“I think the regulator needs to come out and be clear about what was meant by RU64. It is so frustrating that it cannot be a little bit clearer about what it meant.”

Scottish Life head of communication Alastair Buchanan says: “The environment has changed and is now more about stakeholder. The PIA should be revising RU64 and setting out more specific advice so advisers stop avoiding giving guidance to clients.

“It is difficult to build the industry in the way we want when the regulator is inhibiting growth. The regulator needs to be more open about what can be done to allow advisers to be more confident about advising in this area.”

Uncertainty about promoting pensions is not entirely due to RU64 confusion. Stakeholder is still being finetuned and many providers are unable to finalise their plans for stakeholder products.

Zurich IFA pension marketing director Tony Reardon says: “As we get nearer to October, providers will start saying whether they are going to offer schemes. As employers are coming to a stage where they are going to decide what they are doing, the planning blight will come to an end.”

The Government is continuing its effort to encourage pension provision. Social Security Secretary Alistair Darling has announced a new proposal for pension credits which means that people on low and modest incomes can save without fearing means-testing.

ABI spokeswoman Suz-anne Moore says: “People around the threshold of means-testing are reluctant to save as it might affect their benefit. Now they will be rewarded for saving and benefits will not be cancelled out. With the introduction of stakeholder, this should bring new people into the savings market.”

But while this plan isbeing welcomed, it is still just a proposal and confusion will remain until full details of the scheme are confirmed.