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Hopes rise over rethink of pensions price cap

The Treasury is believed to be reconsidering the 1 per cent charge cap on stakeholder, according to senior industry sources.

Money Marketing has been informed by industry insiders that the Government is rethinking the cap imposed on stakeholder and possibly Catmarked Isas and is planning to issue a consultation document or policy statement before the end of the year.

Norwich Union director of pension development Jerry Barnfield also appears to have confirmed the move. Speaking at a Money Marketing IFA UK roadshow in Bristol last week, Barnfield said: “The Government recognises that maybe the 1 per cent cap was not right.”

Such a review would be warmly received by pension providers which have struggled with increased pressure on their profit margins, admin overload and having to wait for up to 15 years before breaking even.

Advisers have struggled because of falling revenue, saying they cannot afford to provide advice on such products.

Industry sources claim such a review would serve as a rec-ognition by the Government that stakeholder&#39s 1 per cent cap was too ambitious.

It is unclear what form the Treasury document will take.

One life office spokesman believes the move is in res-ponse to the Treasury&#39s Savings and Assets for All paper released in April. The paper examined ways to get the less well-off to save and included suggestions for child trust funds and savings gateways.

IFAs would welcome any move on the price cap by the Government.

Wentworth Rose managing director Philip Rose says: “If the Government is listening, then I take my hat off to them. The trouble with the 1 per cent environment is that it simply does not allow for funding of advice or a proper profitability for the companies to develop the product.”

Clerical Medical pensions strategy manager Nigel Stammers says: “If the Government does review the cap, it is as a result of the fact they do have distribution problems with stakeholder. They are not rea-ching the people they need to.”


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