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RU64 could be revived for NPSS

Advisers could be forced to grapple with another RU64-style rule in the run-up to the implementation of pension personal accounts, warns Axa head of pensions and savings policy Steve Folkard.

He fears that pension advisers may have to explain to clients why a pension is at least as suitable or more so than a stakeholder product or personal account when the plans for the NPSS are finalised.

Folkard highlights a paragraph in the FSA’s recent response to the Pensions White Paper which states: “Personal accounts are likely to be suitable for many of the same consumers for whom a personal or stakeholder pension would be suitable.

“We will have to consider how best to regulate sales of products in the run up to the introduction of personal accounts and the sale of alternative products, instead of personal accounts, after they are introduced.”

Folkard points out that the FSA has already spurned the chance to remove unnecessary restrictions on pension advice by scrapping RU64.

He says: “Advisers may have to explain why what they are recommending is as or more suitable than a stakeholder and personal account, despite the fact that personal accounts have not and may not be implemented.

“It would be a brave person to bet against a change in Government at the next election. How do we know personal accounts will even survive the next Government? We all know Gordon Brown is against scrapping means-testing.”

Informed Choice managing director Nick Bamford says: “This will inevitably get in the way of the distribution and production of pension products.

“We had exactly the same ridiculous situation with RU64 when stakeholder products were on the horizon. Is the Government expecting us to advise everyone to put their money in a cash savings account in the run-up to the NPSS?”


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