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.
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