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Jupiter wants end to life office contracted-out monopoly

Jupiter has called for an end to the life office monopoly on contracted-out pension money and says insurers have done a mediocre job looking after these funds.

Pensions development manager Jamie Fergusson says there is no reason why the millions of pounds in funds from people who have contracted out of the second state pension should not be channelled through the open market.

Fergusson says it is unfair that people who could be better off investing their money in a Sipp are forced to keep some of their pension in poor or average-performing with-profits policies.

He says this can be particularly frustrating for customers who want to go into income drawdown and need to consolidate their pension pots.

Fergusson argues that the restriction is inconsistent with recent pension reform which allows people to take more control of their assetsHe says: “If life offices had been doing a good job, they would not mind this money going on to the open market but the fact is that they have done a mediocre job and they will lose a lot of this money if it happens. This cannot be brushed under the carpet.”

An ABI spokesman says: “The Government is going to abolish contracting out anyway so Jupiter has missed the boat by about 10 years.

“The stated aim behind contracting out has always been to ensure that there is no advantage in staying in or contracting out. It was also to encourage private saving, not to encourage different types of investment.”

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