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Furore at MVAs on deferred pensions

Life companies have been blasted by IFAs for imposing hefty market value adjusters of up to 27 per cent on the pension pots of people deferring or taking partial retirement.

IFAs claim that Friends Provident, Clerical Medical, Norwich Union and Scottish Widows are all guilty of imposing penalties on with-profits pension planholders who choose either to defer or take part of their fund.

The news comes as a briefing note from Standard Life seen by Money Marketing reveals that it is also applying an MVA to any pension pots not being vested, whether at the selected retirement date or later.

IFA firm Close Wealth Management claims that such penalties are bad practice and should be stopped. It says it is in discussion with product providers and that, as a result, Friends has relented on the MVA.

Widows says it makes it clear that there is only a guarantee of no MVA at the retirement date.

Close Wealth Management chief executive Martin Smith says: “This is poor practice and if companies are doing this they should think about changing it. There will be people who have already paid the extra MVA – it is dreadful. You think you have already done your time by the time that you get to the retirement date.”

Norwich Union senior actuary David Riddington says: “There is a risk to us and the with-profits fund if you have an open field day on when you apply an MVA but IFAs would not like the price of the products if we did not do this.”

Scottish Life head of communications Alasdair Buchanan says: “I am surprised to see companies doing this. It is not Scottish Life&#39s position to apply an MVA on people who defer their retirement.”

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