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ScotEq surrender values revamped

Scottish Equitable is bowing to market pressure by revamping its pension products in a bid to make its early surrender values more attractive.

IFAs will be able to choose a policy which has high early surrender values and no paid-up penalties or a policy with high maturity values on retirement.

The new terms follow months of IFA pressure over ScotEq&#39s early surrender values. In June, Countrywide network axed ScotEq from its best-buy list for personal, group personal and executive pensions. It felt that the life office&#39s surrender and transfer values did not compare well with other providers.

ScotEq is launching the products from January 1. IFAs can choose a single-premium or regular-premium option on the policies.

The high early surrender contract offers a 95 per cent allocation rate for the first five years for regular premiums. This rises to 97.5 per cent after five years and 105 per cent after 10 years. The high maturity value contract gives 100 per cent for the first 10 years and 102.5 per cent thereafter.

The single-premium option on both contracts offers an allocation rate of up to 100 per cent depending on the size of the premium. There are no withdrawal or paid-up penalties on the high early surrender value contract. Annual management charge is 1 per cent and there is a monthly charge of up to £3.45. Minimum premium is £20 a month or £200 a year.

ScotEq gives an extra 0.5 per cent allocation for every 10 per cent of Lautro rates initial commission. It will boost allocation rates by 2 per cent for full 2.5 per cent renewal commission.

Operations director Graham Dumble says: "It is important to be flexible in today&#39s market."

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