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NU admits strengthening Govt hand on price cap

Norwich Union has admitted it would not agree to a 1 per cent stakeholder cap if it had its time again and accepted its actions strengthened the Government&#39s hand.

Fielding questions from IFAs at Money Marketing Live last week, NU Life chief executive Gary Withers said criticism of the insurer&#39s handling of the price cap issue was fair but should be seen in the context of equity markets at the time.

Withers said strategic decisions on 1 per cent were made in 2000 at a time when nobody was expecting equity prices and savings levels to collapse.

He said the Government would not achieve its target of a reversal of the 60 per cent public, 40 per cent private retirement provision ration without serious dialogue with the private sector, which is currently non-existent.

Compulsion is one potential solution to the problem of low savings ratios but Withers maintained it would require cross-party support to avoid being portrayed as a tax. He called on the Government to increase incentives to save rather than take them away.

Withers said: “I accept we threw the Government a message that made it difficult to turn round and say that we can no longer do this. The observation is a fair one. But that strategy was put together in 2000 at a time when assumptions about equities and savings were quite different.”

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