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Life offices fail to meet 1% rule on stakeholder

Most companies are still failing to meet the maximum 1 per cent charge

under stakeholder on individual per-sonal pension plans, according to a

Money Marketing Focus survey.

The annual With-Profits and Unit Linked Survey shows only four companies –

Equitable Life, Friends Provident, Marks & Spencer Financial Services and

Virgin – meet the Government&#39s charging criteria.

Among the notable absentees are Axa Sun Life, CGU, Clerical Medical, Legal

& General, Scottish Amicable, Scottish Equitable, Scottish Mutual and

Standard Life.

The survey also shows average endowment payouts have fallen yet again.

Even payouts on the normally consistent 25-year endowments fell by nearly

1 per cent last year to £40,152 compared with £40,483 in the

previous year.

Shorter-term endowments have fared even less well. Since the annual survey

started in 1991, maturity values on 10-year plans have fallen by 22 per

cent while maturity values for 15-year plans have plummeted by 26 per cent

and 20-year returns have dropped by 14 per cent.

Elsewhere, sales of with-profit bonds have grown in popularity, almost

doubling in 1999 to £12bn from £6.9bn the previous year.

Friends Provident head of stakeholder services Julian Webb says:

“Stakeholder will continue to cause a huge shake- out in the market for

personal pensions as providers are forced to cut charges to stay in line

with the Government&#39s charging requirements.”

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