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Life offices feel let down by ABI over Comps challenge

Life offices have slammed the ABI for failing to challenge the Government&#39s decision to slash rebates for contracted-out money-purchase pension schemes.

The Department of Social Security revealed last month it is to increase Serps&#39 rebates for appropriate personal pensions in April 1999 following the Budget cut in tax credits on dividends.

But pension experts have launched a stinging attack on the decision to slash rebates for Comps. Scottish Life has already written to pensions minister John Denham, accusing him of abandoning "common sense". ScotLife claims that the decision threatens to kill off the Comps market.

The ABI is considering its position but life offices, including Commercial Union and Scottish Life, feel that it has left its members to fight the decision alone.

Some members claim the ABI is bowing to pressure from life offices which have already pulled out of the market. But those in the market believe the issue should be considered more widely as a stand against Government attacks on the financial services industry.

Scottish Life marketing manager Alasdair Buchanan says: "I think we can reasonably ask why it is doing nothing. If its members are concerned, the ABI should be doing something. It should be making representations for the wider industry good."

The ABI says it is disappointed at the Government&#39s decision but that it is still considering its position. A spokesman says it is taking a "measured" stance on the problem.

The National Association of Pension Funds is lobbying the Government to persuade it to ditch the plan.

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