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Industry counts the cost of new tax and pension regime

The new post-April 6 pension and tax regime designed to simplify the

framework has resulted in increased admin costs of up to 35 per cent.

The regime was conceived with the promise of streamlining the pre-April 6

framework but providers claim the new system has delivered an increased

admin and cost burden as life offices and IFAs try to get to grips with the

procedures.

The increase in costs follows widespread industry discontent on a number

of pensions admin issues, including the inclusion of stakeholder in

money-laundering rules, introduced last week, as well as the end of waiver

of premium as an integral part of a pension policy.

Scottish Life head of communications Alasdair Buch-anan says: “In terms of

how much it takes to deal with the processing of applications for personal

pensions, including attaining evidence of income, 35 per cent seems a

likely figure while the overall costs of writing new business is likely to

be 8 to 9 per cent higher than last year.”

Merchant Investors sales and marketing manager Mal-colm Small says: “We

estimate that in the short term, the processing costs of introducing the

new rules have increased by 10 per cent but we should get them down to

previous levels.

“In our experience, IFAs do net yet understand what is required by the

moneylaundering rules.”

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