View more on these topics

Hope rises as Treasury sets CTF cap at 1.5%

Product providers believe the Treasury&#39s justification for raising the price cap to 1.5 per cent for child trust funds should have been applied to stakeholder pensions and should be introduced across the board for the Sandler range.

The industry is calling for a more consistent approach to charge capping from the Treasury, which says it has set the cap at 1.5 per cent for CTFs because the plans will be very small funds and it wants to encourage a wide range of providers.

But Clerical Medical head of industry affairs Nigel Stammers says this argument could be applied to small company pension schemes and should now be extended across the Sandler range.

The minimum contribution to a CTF will be £10 on top of the Government&#39s initial payment, compared with the £20 one-off minimum payment needed to start a stakeholder pension.

The Treasury says CTFs are not typical of other suite products, including pensions. Its report published this week says the accounts will be smaller in terms of the average size of funds compared with pensions and will have a lower minimum contribution level than other stakeholder products.

Stammers says: “We hope the reasons the Treasury has for justifying 1.5 per cent for CTFs will be applied to pensions but we will have to wait and see. A small fund is a small fund, whether it is labelled a CTF or a pension.”

Scottish Widows marketing director Peter Jordan says: “If this applies to everything for those who have already decided to play in this market the 1.5 per cent makes everything 50 per cent more worthwhile.”

Recommended

MLIM chief Jones leaves company

Merrill Lynch Investment Managers head of UK retail Michael Jones is leaving the group this week, with MLIM refusing to comment on the reasons for his departure. Jones, who has been with MLIM for six years, is being replaced by marketing director Richard Royds, who joined the group in 1997 following its acquisition of Mercury […]

Child Trust Funds at 1.5 per cent

The Treasury has announced the latest rules for Child Trust Funds, which will be capped at 1.5 per cent.

Prestbury predicts industry staff to fall by 40-50% in 2004

Prestbury Financial is predicting a 40-50 per cent reduction in the headcount in the financial services industry by the end of the year due to a big number of mortgage and protection brokers disappearing from the market. Prestbury believes these changes will allow major consolidation in the sector and it wants appointed representatives of its […]

Deloitte & Touche gets record £750k fine for compliance failures

Deloitte & Touche Wealth Management has been hit with the biggest-ever fine for an IFA – £750,000 – for serious compliance failures, including missing pension review deadlines by as much as four-and-a-half years. The FSA has described DTWM&#39s compliance failings as systemic, continuing over a long period and resulting from a wholly unacceptable approach to […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment