Commercial Union is to become the first life office to return to the executive personal pension loanback market after the Pensions Act 1995 forced many life offices to quit.
The loanback facility allows clients to take out a loan from their pension policy provided it is repaid before retirement.
Many life offices, including National Mutual, Commercial Union and Sun Life, pulled out of the loanback market when the Pensions Act 1995 came into force in April.
Under the Act, life offices cannot use a personal pension as security for a loan. Providers quit the market rather than issue unsecured loans.
The ruling came despite Department of Social Security assurances that providers would be able to take security under the Act. Fierce industry lobbying has forced the DSS to revamp the rules but it is yet to release new guidance.
CU believes the new rules will be published shortly and has decided to go back into the market immediately.
Commercial Union pensions development manager Iain Oliver says: "The difficulty will arise if we need to recover the assets on which the loan is secured between now and the time the DSS comes in with the new rules. But we feel there is only a tiny possibility of this."
National Mutual pensions technical manager Dave Lowe says: "We have never issued unsecured loans and therefore we pulled out of the market. But it is a short term withdrawal because the DSS have said they intend to correct the rules."
