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L&G first to shut down product lines ahead of A-Day

Insurers are closing down pension product lines as A-Day looms, with Legal & General leading the way in the early part of next year.

L&G will close its executive personal pension and free- standing AVC contracts from February 28 to focus on post-A-Day lines in the run-up to April 2006.

It has been known for some time that certain product lines would become defunct after A-Day such as FSAVCs, retirement annuities and Cimps.

But L&G is proving to be the trailblazer, closing lines early rather than waiting until the last minute to grab final money entering these contracts.

Axa head of savings & pension policy Steve Folkard says L&G’s move is premature until the rules, particularly around such areas as death benefits, are finalised.

Standard Life head of pensions policy John Lawson says: “The jury is out on AVCs. There will be no requirement for schemes to offer one but they can provide better-value tax-free cash for some people in defined-benefit schemes.”

Standard will hold its SSAS open for six months after A-Day and close it if inflows collapse. Axa is adamant that SSASs will continue to provide benefits over Sipps and says some clients prefer trust-based schemes.

Folkard says: “It is premature to close any schemes until the legislation is clear.”

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