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
Can a healthier body really lead to a healthier mind?
There are growing signs that positive lifestyle decisions taken now could lead to positive effects on mental capacity in later life. Vitality’s Deepak Jobanputra examines the emerging evidence.
Amyr Rocha-Lima: Why HR officers should be your next business relationship target
Being the dedicated adviser to the employees of local businesses will boost your reputation and grow your firm Taken at face value, the roles of financial planner and HR officer may not appear to have much in common. Yet, the two can dovetail perfectly in some situations. The most obvious benefit is when it comes […]
1
Are DFM deals really taking risks off advisers?
Advisers must be able to trust their discretionary fund manager as decisions that backfire could still be the advisers’ responsibility, experts say. In the latest edition of Money Marketing’s series of live debates, MM Wired, gbi2 consulting director Graham Bentley, Signpost Financial Planning chartered financial planner Nigel McTear, Charles Stanley senior investment manager Will Walker-Arnott […]