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Life offices back move to protect low earners on pensions

The Financial Services Consumer Panel has won the support of life offices

in its bid to urge the FSA to protect low-income consumers from misbuying

stakeholder pensions.

The panel, which represents consumer interests in the development of

regulation for the financial services industry, says stakeholder threatens

to leave the low-paid worse off.

Chairman Barbara Saun-ders says the issue of affordability has not been

adequately addressed by the FSA.

She adds that, for some people on low incomes, the financial benefit of

saving for retirement may be lost because it does not give them more than

the minimum income guaranteed by the state.

Life offices say this means those who have least to save are more

vulnerable to misbuying stakeholder.

They fully back the panel&#39s opinion because if low-income consumers buy

stake- holder and only pay the minimum £20 a month into their policy,

they could lose out when they retire.

If consumers are not made aware of this issue, they could wipe out years

of savings as paying the minimum runs the risk of falling short of the

minimum inc- ome guarantee.

Life offices say this issue must be highlighted and consumers must be

aware of the danger.

Clerical Medical pensions strategy manager Nigel Stammers says: “The

fundamental problem highlighted is that the low-paid who most need advice

on areas such as affordability and the Mig are being denied access to it.”

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