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Confusion on stakeholder exemptions

The DSS is sending mixed messages on the terms of stakeholder exemptions for group personal pensions, raising fears that some IFAs&#39 corporate clients may not be compliant.

Scottish Life had asked for a DSS exemption for potentially thousands of group personal pension schemes which included waiver of premium, sold over the past year, which it feared were not stakeholder-compliant.

The move followed a last-minute clarification from the DSS which indicated that GPPs with a 3 per cent contribution from employers may no longer be accepted as alternatives to stakeholder.

The DSS ruled that the 3 per cent figure could not include waiver of premium or life insurance costs, meaning IFAs who have sold schemes which do include the cover may not be acceptable as stakeholder alternatives. This may force IFAs to revisit clients and advise them either to increase contributions or offer access to a stakeholder.

But the waters have been further muddied by the last DSS clarification which states that the ruling only applies after April 2001. The cost of waiver of premium benefit is allowable under contracts taken out before April 2001.

Scottish Life head of communications Alasdair Buch-anan says: “This shows a complete lack of joined-up thinking. Rules are being made up as they go along. It is virtually impossible for IFAs to be confident about what is going on.”

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