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IFA warning on selling stakeholder for poor

IFAs will be reluctant to recommend stakeholder to low paid workers while state pensions are means tested according to research by Scottish Life.

The research conducted during the life office&#39s “Unplugged” pensions roadshows found 92 per cent of IFAs attending the “gig” would be worried about recommending stakeholder to the low paid because of the potential consequences of pension income being offset against means tested state benefits.

Instead 73 per cent said they would rather recommend an Isa or other savings product instead of stakeholder.

Scot Life also found nearly 57 per cent of IFAs would be unwilling to offer stakeholder unless they had provided detailed advice. While less than 1 per cent supported the Government proposed use of decision trees.

The majority of IFAs welcomed the stakeholder consultation process, with more than two thirds of the 600 IFAs attending the series of roadshows believing it would help produce a more workable system.

But 19 per cent of IFAs remain sceptical over whether the consultation will produce anything worthwhile.

Scot Life head of pensions strategy Steve Bee says: “The message for the Government is this; if they scrap the means testing of pensions for the low paid they will remove a major blockage to stakeholders success. If not advice is essential to ensure people don&#39t waste their retirement savings.

“The second point is more complex, but just as important. The threat of future misselling accusations means that the vast majority of advisers will not offer stakeholder without a credible factfind.


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