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IFAs slam Scot Wid bonus scheme

IFAs have criticised Scottish Widows’ new bonus payment strategy claiming it penalises guaranteed annuity policyholders.

They claim the assurer is paying lower annual bonuses to guaranteed annuity rate policyholders to stem the rising costs of honouring these guarantees.

Guaranteed annuity rate pensions of which Scottish Widows has sold thousands, ensures policyholders receive a minimum level of income at retirement.

But as annuity rates have fallen the cost of honouring these guarantees has risen.

The assurers&#39 new bonus payment strategy awards higher annual bonuses to non-guaranteed policy holders than to those opting for guarantees.

IFA Syndaxi financial planning director Robert Reid says "It is not acceptable to vary the terms of the policy later on. If a company makes a mistake it should pay for it."

Scottish Widows pensions strategy manager Ian Naismith claims the new bonus payment scheme protects all policyholders. He says: "We are trying to minimise the consequences for non guaranteed annuity policy holders. In turn this will minimise the hit on all other endowment policyholders."

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