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EPP exodus feared as Eagle Star quits market

Eagle Star is scrapping its older-style group personal pension contract because of the heavy costs of running such policies.

It is also pulling out of the executive pension plan market, claiming that falling sales no longer make offering such a contract profitable.

IFAs say they are shocked by the move, which has raised fears that other EPP players could follow.

Eagle Star says it will concentrate on selling its new defined-contribution package, working predominantly with fee-based IFAs or those prepared to accept level commission.

The move will narrow the accessibility of Eagle Star&#39s group pensions as the DC product is only available to employers whose payroll systems are fully web-enabled.

The EPP was withdrawn at the end of last month because of a significant drop in demand. The company claims more personal pensions are being taken as an alternative.

Spokeswoman Sandra Paul says: “We are still focusing on pensions but are focusing on where it pays to be focused. It makes business sense to concentrate on more profitable areas which are more cost-effective.”

Intelligent Pensions managing director Steve Patterson says: “It is a bit worrying if a major provider withdraws from the market. Eagle Star&#39s was a good contract with good investment links. It is possible others will now pile out of the market.”

Scottish Mutual pensions and investments development director Leslie Gray says: “We have not experienced a drop in demand. They are selling as well as they have always been.”

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