Legal & General has introduced immediate vesting, a new option for its existing personal pension plan that allows customers to pay a single premium to either top up their pension or take advantage of the carry forward/carry back rule.
Carry forward/carry back gives a personal pension investor the chance to contribute to their pension for years when no contribution was made. Carry forward will be phased out following the introduction of stakeholder in April 2001, with the last chance to carry back occurring in January 2002.
The product also does away with paying any charges. Usually an investor has to pay an initial charge to claim money from a personal pension plan to buy an annuity. Immediate vesting enables investors to buy an annuity immediately without having to claim money from a pension plan, therefore avoiding any initial charge.
Legal & General is one of a growing number of companies that are focussing on this area of the market. This is because the abolition of carry forward/carry back could lead to a massive amount of new business being written, as many ordinary members of the public are not aware of it and have not made any contributions.