Providers recommending mass contracting back into S2P are playing Russian roulette with people’s retirement incomes, says Informed Choice managing director Nick Bamford.His attack comes as the industry desperately tries to fend off an FSA review of contracting out, which sources say could cost the industry over 3bn in compensation. Many insurers have again been writing to customers presenting the pros and cons of rejoining S2P but some firms, including Norwich Union and HSBC, have automatically contracted direct consumers back in. NU is reviewing this policy but of the 40,000 consumers it wrote to offering the choice, only 6,800 chose to remain contracted out and 37,200 were automatically contracted back in. Bamford says: “Recommending mass contracting out is like playing Russian roulette with people’s retirement incomes. It is an individual case by case decision and I hope any individual who goes back in and ultimately finds themself worse off is compensated by product providers that cajole them to do this.” He says a key risk of contracting out is that the Government will reduce the value of Serps. He says its proposal to abolish contracting out also creates an opportunity for some to exploit the National Insurance rebates for as long as they can. Scottish Widows, which only automatically contracts back in people over 50 and has automatically contracted in 2,414 people so far, says it is “entirely comfortable” with its policy. Head of pensions market development Ian Naismith says: “These people will not be affected by the increase in state retirement age and would almost certainly lose out by not contracting back in. They have not responded to previous letters about contracting out.” An FSA spokesman says: “There are no specific rules on this area. Firms have to make their judgement based on the circumstances.”
Unity Home Loans
Prime Buy To Let 2 Year Tracker
The Tory’s independent tax commission published its well leaked proposals to reform the tax system and slash the overall burden of taxes by 21bn.
Coventry Building Society
Extra Light Full Status 6.5% Fixed rate
NDF Administration – NDF Growth Kick Out Plan September 2006
One of the areas that will be high on the new minister for pensions’ to-do list will be the forthcoming review of automatic enrolment (AE). The outgoing minister had regularly said that AE contribution levels would need to be revisited early in this parliamentary term, and new research by Jelf Employee Benefits reveals employer support for such proposals.
- Top trends
News and expert analysis straight to your inboxSign up
Latest from Money Marketing
A majority of independent financial advisers think there should be a single rate of tax relief according to this week’s Money Marketing poll. More than 120 advisers took part in the poll with 77 in favour of a single rate of tax relief, 39 against and six undecided. Yellowtail Financial planning managing director Dennis Hall […]
The FCA has issued a warning over ‘commoditised’ defined benefit pension transfers running the risk of unsuitable advice. In a letter sent to advisers holding pension transfer permissions, the regulator reminds planners that a “key area” of its focus is on pension transfers, and that it will later this year be contacting all firms to […]
Problems look set to arise for pension schemes operating relief at source