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Stakeholder putting on weight for birth

Regular readers of Money Marketing have probably realised by now that if

there is a mug shot of myself on the page, they can look forward to reading

another informative article about stakeholder pensions.

In these pages, I have traced the progress of stakeholders from when they

were just a glimmer in the Government&#39s eye. Now, it gives me great

pleasure to mark another milestone in their history.

On May 25, the regulations setting out the detailed legislation for

stakeholders were laid before Parliament. The regulations do not announce

any major shifts of policy. But they are still important because they

implement the key decisions that have already been made.

Now that the rules are in place, everyone inthe industry will be able to

move their plans forward. Of course, as I am always careful to point out,

there is a still a bit more work to do.

The tax legislation is still being finalised and the FSA is in the process

of developing its rules on selling stakeholders and authorising scheme

managers. But the remaining parts of the stakeholder framework will be

slotted into place over the summer.

That said, while there are no ground-shaking changes, we have finetuned a

number of details in response to the 80 or so people who came back to us

with comments on the draft regulations.

We were happy to take on board many of the points they made and changed

the rules accordingly. Many providers told us they wanted the option to

value funds monthly rather than daily. We saw the sense in this and, asa

result, we have allowed schemes greater flexibility in valuing funds for

the purposes of calculating charges.

Providers were also concerned that contributions made to the scheme via

cash or credit card payments could prove unnecessarily expensive to

administer. Again, we have listened and we are giving schemes the right to

refuse contributions paidin this way.

We have also made a number of changes to the employer access requirements.

We have clarified what we mean by “exit penalties” for group personal

pensions and made some changes which should help to minimise any disruption

for those employers who already have good pension arrangements for their

staff in place.

And it is worth restating here that employers which pay at least 3 per

cent into a personal pension plan will be exempted from providing access to

stakeholders, as will the smallest employers withfive staff or fewer.

The other thing that needed clarifying at this stage was the rules on

“with-profits” schemes. Schemes will be allowed to offer “with

profits”policies but only as long as they still fall withinthe 1 per cent

maximum charge and the fundsare clearly segregated.

I know this particular policy has had somecritics in the industry but as a

Government we are committed to putting the punter first – no exceptions. We

have laid out the framework, now it will be up to the industry to decide

what they are able to offer within these rules.

As I have said repeatedly over the last few months, this is still part of

an ongoing process. Over the coming months, we will continue to work

closely with the pension industry and the regulators to minimise the

birthing pangs of stakeholder pensions. By the time April 2001 rolls

around, we should be in a position to deliver a robust, healthy pension

scheme that will benefit millions of people in this country. Ask any mother

and she will tell you that it might hurt like hell but it is all worth it

in the end.

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