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Leaked letter reveals DWP pressure to retain RU64

The Department for Work and Pensions is pressurising the FSA to retain the RU64 rules ahead of this week’s White Paper which will set up the national pension savings scheme.

The FSA was expected to abolish RU64, brought in to accompany stakeholder pensions, at a board meeting this week.

In a letter to Work and Pensions Secretary John Hutton, leaked to the press this week, a departmental civil servant says: “We think the FSA board could be persuaded to delay a decision if intervention is made at a sufficient level.”

Political analysts believe the publication of the letter is tantamount to ministers putting pressure on the FSA board.

Last week, FSA chief executive John Tiner told the Treasury select committee that “risk mitigations” were now in place to prevent systemic misselling and RU64 would probably be lifted.

Beachcroft Consulting senior consultant Mark Penton says: “The likelihood is that it will be retained until there is more clarity on the NPSS. Remember, this is politics, with simultaneous pressure from the likes of Which?’s Mick McAteer and the consumer panel.”

Aegon UK head of business regulation Steven Cameron says: “Any delay in the removal of RU64 will be unfortunate, unnecessary and detrimental to consumers.”

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