Pension experts claim the issue of exit penalties incurred when switching from group personal pensions to stakeholder has not been resolved by the Government and regulators despite the introduction of stakeholder this week.
They also claim last month's final regulations contained an extra admin burden for providers but the Government did not consult the industry.
Experts say it is not clear under what circumstances policyholders will be hit by exit penalties if they switch from a GPP to a stakeholder.
They claim the final regulations on stakeholder contain a new requirement which forces life offices to send a letter of confirmation when the policyholder leaves the scheme, which could lead to unexpected systems issues and extra costs.
Stakeholder managers thought they would only have to send out annual statements, typically on the anniversary of the scheme. The new requirement means there will be no breathing space for stakeholder providers to get their admin systems in order.
Scottish Life head of pensions strategy Steve Bee says: “Exit penalties in certain contexts have not been clearly defined.”Clerical Medical pensions strategy manager Nigel Stammers says: “This could raise some systems issues for some providers. The fact that this seems to have been added without any consultation does not bode well for the future.”
Pension panel, p8-10