The FSA should force life offices to disclose expenses deducted from with-profits funds' terminal bonuses under RU64, according to some pension experts.
The call comes amid fears that charges on with-profits pensions will not be transparent in comparison with charges on unit-linked invested schemes transferring to stakeholder contracts.
It is claimed this makesit impossible to work out if transferring from existing with-profits schemes to stake-holder will “materially disadvantage” policyholders.
Some providers have contested that terminal bonuses are fixed by life offices without disclosing what either the full investment returns or expenses deducted from the fund are, creating an unlevel playing field for unit-linked schemes with fully transparent charges.
The FSA's RU64 survey of pre-stakeholder schemes req-uired life offices to calculate the financial detriment – material disadvantage – incurred in stakeholder transfers.
Skandia senior manager pensions development Brian Newbould says: “We would like transfers from with-profits to be as transparent as they will have to be with unit-linked investments. It is not clear how it is possible to work out material disadvantage if you do not know what the charges are in the first place.”
But FSA spokesman Andy Fleming says: “The key point with material disadvantageis transfer values, not whether schemes are with-profits or unit-linked.”
But the regulator confirms it is examining the issue.
View more on these topicsNews
Bhoys are black in town
The Diary cannot imagine there are many people for whom the noble game of football is not an integral part of their lives.But none more so than Celtic-supporting Scottish Life International supremo John Allison. So imagine his delight when, on a family holiday in the US, he found a pub showing Scotland's finest in their […]
Axa gets a scent of victory in orphan asset vote
Axa Sun Life believes its controversial proposals for the distribution of its £1.7bn orphan assets have secured the backing of its policyholders.The company needs the support of 35 per cent of its policyholders by value of their policy.The vote will not be passed on numbers of policyholders alone because high-value, long-term policies will carry a […]
It's not networking
IFA is one of those three-letter acronyms that rolls off the tongue of anyone in financial services. But IFA looks set to join PIA, SIB and Pep on the scrapheap of financial services acronyms that belong to the last century if advisers do nothing about it.Some would argue that the Association of Independent Financial Advisers […]
A suitable case for decision trees
You can debate the principle of decision trees forever. A veritable forest full of articles,in fact. You can consider that consumers are at greaterrisk because, if they followa decision tree to the wrong conclusion, they have no rec-ourse in law.But we are going to have them and, positioned prop-erly, they could help consumers understand what […]
Case study: administration — managing group life schemes
Our client leads the global market in high-tech electronics manufacturing and digital media. The trustees of the company’s final salary pension scheme insure death-in-service lump sum and dependants’ pension death benefits for active employees, as well as dependants’ pension benefits for deferred members (those who have left service).
Newsletter
News and expert analysis straight to your inbox
Sign up Rate rise back on the cards as Carney welcomes data
Expectations for a UK interest rate rise in August hardened after the services sector reported its fastest growth since last October on Wednesday, and were further buoyed by comments made by Bank of England governor Mark Carney in a speech given to the Northern Powerhouse Summit in early July. The IHS Markit CIPS Services Purchasing Managers Index, […]
FE: Don’t despair on Chinese equities just yet
Despite growing concern about the economic outlook for China, investors need not worry
Scottish Widows’ £109bn mandate fight down to BlackRock and Schroders
BlackRock and Schroders are frontrunners to manage £109bn for Lloyds Banking Group’s Scottish Widows Investment Partnership funds, Bloomberg reports. The London-based bank is set to make its decision in the third quarter of this year, after it invited bids for its contract at the start of this year after ending the agreement it had with […]
Comments