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IFAs angry as Eagle Star calculates endowment rate at 7%

IFAs have attacked Eagle Star for calculating the investment rate of return on its endowment rev-iew letters at 7 per cent instead of 6 per cent as the ABI and the Institute of Actuaries have recommended.

IFAs say calculating on a 7 per cent basis allows Eagle Star to hide the potential shortfalls and reduce the increase in premiums clients are being forced to shell out to meet expectations. Most other providers have accepted the ABI and IoA recommendation and have based their reviews on 6 per cent.

IFAs say they have clients whose endowments are worth less than the premiums they have paid in and fear they are not even being calculated at the right rate now.

Zurich Financial Services is the holding company for Eagle Star. Senior external affairs consultant Jane Hewin says: “The FSA gives a range of figures from which to calculate. Part of our decision to use 7 per cent rather than 6 per cent is because we think this is realistic for our own funds. We think 7 per cent is a realistic figure set against the context of our own funds.”

SG Independent Mortgage Services IFA Bradley Stevenson says: “Eagle Star is simply incompetent. It does not know what it is doing. Six per cent is the rate all new sales and reviews should be based on but it is calculating them on a 7 per cent basis.”

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