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Industry up in arms with Balls

Bonjour! Here I am in Nice where the weather is great but I have had little time to top up my tan as I’ve been rushing around the various conference rooms at the Money Marketing Retirement Summit.

The French keyboards are confusing to type on and the computer keeps crashing as I write but apart from that everything is hunky dory.

But tearing myself away from pensions and the burning issues surrounding retirement for a moment, I will return to the anger that greeted Treasury Economic Secretary Ed Balls’ claims that the protection industry supported the abolition of pension term assurance.

At a House of Commons debate earlier this month a total of 145 MPs voted against the abolition of PTA but the clause was passed with 262 MPs voting in favour of abolition.

While setting out the case around why the government decided it was necessary to abolish PTA, Balls said that some in the industry agreed with the approach and cited Aegon Scottish Equitable in particular.

At this point, while reading through the transcript, alarm bells began to ring because Money Marketing distinctly remembers Aegon being one of the most outspoken providers against the abolition of PTA. It quickly became clear that certain parts of Aegon’s response to the Treasury had been taken out of context.

Balls said: “An expert at Aegon Scottish Equitable said: ‘Although we understand the ABI’s position, we do not think that its proposals are a workable solution for providers or for customers’.”

Balls went on to say it was on this basis that the Treasury decided it could not continue to allow PTA products in the market.

But although Aegon did say it thought the ABI’s suggestions were unworkable, it went on to suggest other alternatives to keeping PTA alive and kicking.

The comments by Balls were therefore misleading and if the Treasury misinterpreted Aegon’s response and used it to justify the scrapping of PTA, then it makes you wonder how many other industry responses were misinterpreted and used to justify the Treasury’s decision.

Hargreaves Lansdown protection research manager Jon Briggs echoed what many others were thinking when he said it is cowardly for Balls to blame the industry for the scrapping of PTA by misinterpreting its responses, calling the debate “democracy with hindsight”.

It is too late to do anything about PTA but it is important not to let the government and the Treasury think that the industry supported the decision to axe PTA.

It was important that the industry did not to take this decision lying down after spending millions of pounds developing a product that lasted all of nine months.

And it is important these issues are highlighted to the Government to ensure it is made fully aware of the effect its constant meddling with financial services is having on the industry.


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