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Formula for confusion as pension review delay drags on

Hundreds of IFAs have been left in limbo unable to close their pension

review cases because a PIA loss-calculation blunder remains unresolved.

The ABI-backed Pension Advisers Support Scheme, which assists IFAs through

the review, has instructed 162 IFA firms to put their cases on hold since

the FSA announced it would be amending the formula on calculating redress.

IFAs face a delay at least until the summer because the regulator is

conducting research to check that the new formula is failsafe.

The formula relates to loss calculations for some transfers in phase two

of the pension review.

Pass has received calls to its helpdesk from more than 100 IFAs asking for

clarification after they were left in the dark about what to do about

transfer cases.

Their confusion has been compounded by a phrase in one of the FSA

bulletins, which the regulator has had to explain to actuaries in a letter

which went out on April 7.

The FSA says one-fifth of transfer cases could be materially affected by

the miscalculations which arose from guidance on how firms should adjust

for the change in an investor&#39s Serps entitlement after a pension transfer.

Pass review manager Derek Warner says: “The impact of bulletins 7 and 8 is

to hold back cases that could otherwise move forward to completion and

compensation.”

FSA spokeswoman Sarah Modlock says: “It is certainly true that there is a

hold-up in a certain category of case.”

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