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Ilag warns Government over stakeholder

The Investment and Life Assurance Group is warning the Government its stakeholder plans risk another pensions transfer scandal due to churning.


The group believes Government proposals on minimum standards stakeholder will force pension companies to maximise funds under management.


Its warnings follow warnings from the Association of British Insurers and former welfare minister Frank Field that companies setting up stakeholder plans could see their investment wasted as stakeholder encourages a secondary market.


Its submission says: &#34This could create a climate which will encourage transfers from other pension arrangements, when this may not be in the investors interests, as this is the quickest way of increasing funds. This could create an in-built bias for another pension transfer scandal.&#34


ILAG is also concerned schemes will be force schemes to run at a loss for several years and that no thought has been given to monitoring the solvency.


It also believes that many people will not be covered by employer and affinity group schemes and that the minimum charge will be too low to reach them through other marketing.


Ilag pensions committee chairman Chris Mapp says: &#34There is still too much uncertainty and Government needs to move quickly to allow potential providers to plan accordingly.&#34

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