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Pension with-profit woes

Thousands of employers may be forced to abandon existing group personal pensions in favour of stakeholder if the Government excludes with-profit funds from its proposals.

The life industry fears predictions of a GPP bonanza will prove unfounded as they are caught out by the fact the Government regards market value adjusters as an “exit penalty”.

The Government&#39s key decisions document says GPPs will qualify for exemption from stakeholder if employers make a 3 per cent contribution and the plan has no exit penalties on transfers.

Because of this “penalty” the thousands of GPPs will not be exempt compelling employers to offer stakeholder as well.

Life offices usually reserve the right to apply a market value adjuster to GPP with-profit funds when the policy is encashed or transferred early if investment returns on the fund&#39s underlying assets have not been sufficient to support the bonuses credited.

Providers and IFAs have warned this could force life offices to develop new investment products to bridge the risk gap between cash and equity investments.

Clerical Medical pensions strategy manager Nigel Stammers says: “An MVA is not an exit penalty. It is there to protect all with-profit policyholders.”

Scottish Equitable pensions development director Stewart Ritchie says: “An MVA is a means of delivering fair value to leavers and stayers in a scheme. A MVA should not be classed as a penalty and it is very important the DSS and the Inland Revenue are clear on that.”


Bumper Isa season kicks off

January saw the highest demand for Isas since their April launch, according to MarketMinder&#39s Isa tracking report.The research, based on 2,000 face-to-face interviews, showed thirteen per cent of savers are “likely” and four per cent are “very likely” to buy an Isa. This compares with a total of just seven per cent of investors surveyed […]

IFAs Frizzell-ing out move

More than 40 RIs from IFA Frizzell Life and Financial are expected to defect to rival IFA Towry Law this week.The dissident RIs are known to have approached Towry Law as concerns have mounted over Frizzell&#39s future direction and place in the market. They were also subjected to a new training and competence regime in […]

Pension health warning

An increasing shift to money purchase pensions through stakeholder may leave many more people with very low incomes if ill health stops them working, according to Government actuaries.Most final salary schemes provide some provision for early retirement on ground of ill health, while money purchase schemes leave individuals with only the money they have saved […]

LSE to end 200 years of mutuality

The London Stock Exchange is a step closer to ending nearly 200 years of mutuality.LSE has called a meeting for March 15 when shareholders with voting rights will be asked to approve demutualisation proposals.The plans need to win 75 per cent of the vote to allow dealing in LSE shares to start in May.City estimates […]


Guide: reporting to the Pensions Regulator — what and when?

Johnson Fleming has published a step-by-step guide demonstrating the importance of record keeping and reporting, and how it can ensure you operate a successful scheme. The guide takes you through some key questions you need to ask and identifies the information you need to obtain. The topics include: why you need to keep records and the benefits of doing this; registering your scheme; what information you need to record to ensure you meet the Pensions Regulator’s requirements; and what items need to be recorded and when.


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