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S&P looks at rating pension funds

Standard & Poor&#39s is looking at giving financial strength ratings on occupational pension schemes which it says could make it easier for IFAs to advise on transfers.

The international rating agency suggested the move at last week&#39s National Association of Pension Funds conference in Edinburgh. It could look at asset allocation and exit penalties, much as with-profits fund ratings already do.

Industry sources say the move could mean the FSA would have to change regulations currently forcing IFAs to assume an occupational scheme will pay out in full. They say it could lead to IFAs looking at the strength of a final-salary pension promise when considering transfers.

At present, companies pay S&P for financial strength ratings but some say that companies may be unwilling to pay for public information about their own pension scheme to be issued, which could mean that users of the ratings would pay.

S&P spokesman Cameron Andrews says: “There is a clear need for objective and rigorous ratings in the pension sector. We already have extensive pension rating expertise as part of our overall rating business. We are looking to see if there is demand for rating pension funds and gauging the views of the marketplace.”

Informed Choice managing director Nick Bamford says: “In principle, this is brilliant for scheme members and their advisers but it would depend on the cost and availability of the information. Occupational schemes are being treated almost like with-profits funds, with Opra limiting transfers with a market value adjuster and S&P looking at offering ratings.”


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