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FSA says two million could make switch to stakeholder

The FSA estimates that two million people with personal pensions should consider transferring to stakeholder.

Its paper, To switch or not to switch, that is the question, published last week, sets out the issues that consumers face when considering switching from a personal pension to a stakeholder.

The paper also says that those considering switching should seek advice, comments welcomed by IFAs.

IFAs say the paper underlines the complexities of changing schemes.

The paper identifies two million people in the Government&#39s stakeholder target group with personal pensions which it says should consider switching to stakeholder.

IFAs say the paper will put further pressure on life companies which have not yet repriced their old pension book to come into line with stakeholder charges.

FSA risk assessment division economist and author of the report Isaac Alfon says: “Whether someone would benefit from switching is not a simple issue. Consumers need to weigh the costs and benefits carefully before making their decision and may need financial advice.”

Clerical Medical pensions strategy manager Nigel Stammers says: “The preamble mentions that you may want to seek advice but the paper goes on to explain the complexity of the issues. It is hard to imagine a consumer making the decision without seeking professional advice.”

Newman Houghton & Co pensions consultant David Brunning says: “I have just advised a client who will be £20,000 better off by switching to stakeholder but he is only going to get that benefit because he has a proactive adviser.

“The FSA should recognise that because people who could switch are not doing so, they should be encouraged to seek advice.”

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