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Stakes and pains

I am an avid reader of Money Marketing but do not recall seeing any article concerning the peculiar stance adopted by Scottish Equitable on its existing personal pension book now that stakeholder is with us.

Most major pension providers took a decision months before April 6 to convert the charging structure of their existing personal pension plans to stakeholder terms to prevent the admin headache of having to convert the majority of existing plans to stakeholder. For most investors, a switch to stakeholder has to be best advice.

One would be given to believe by the number of photos we see of Stewart Ritchie that Scottish Equitable is at the cutting edge of pension reform. In practice, the opposite is the case. Six months into stakeholder, Scottish Equitable is still deliberating on whether it will allow internal penalty-free switches to its stakeholder.

The only comment I could muster from my local Scottish Equitable branch in Kingston was that any increments to existing personal pensions would attract full Lautro indemnity commission and not stakeholder indemnity commission, so why complain? Can you believe such an inane comment? In saying this,I guess it also failed to acknowledge the existence and role of fee-based advisers.

One appreciates that Scottish Equitable offered high allocation rates on personal pensions depending on the number of years to NRD. So did many other pension offices but they seem to have coped with stakeholder implications without problems.

I recently had the pleasure of reviewing the many personal pension plans of an existing and long-standing client. It took Scottish Equitable&#39s Edinburgh customer services department three weeks and several reminders to supply relevant information. Since September 1994, my client had invested £50,450 for a current fund value of £55,319 (so much for the high allocation rate, then). The sting in the tail was that the transfer value offered was £46,431 – a swingeing transfer penalty of 16 per cent. I should add that there was no investment in the with-profits fund so it could not hide behind a market value adjuster.

It had also specifically been asked what the penalty might be for discontinuing regular premiums. The response offered was: “If regular premiums stop/reduce, a paid-up charge may be applied to the policy.” Is this vague or is this vague?

Another two weeks on and I am still awaiting answers to these and other questions from both the Edinburgh customer services department and the Kingston office. This amply demonstrates the lack of respect that Scottish Equitable is showing to the IFA community.

Isn&#39t it about time that Mr Ritchie spent less of his time parading around the media circuit and more time in Edinburgh getting his own house in order?

Keith Bush Radford Smith Financial Services, London W4

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