Standard Life's with-profits pension products have plunged from the top to the bottom of pension analyst O&M Solutions' comparative tables following changes to projection assumptions.
O&M has told its 2,000 IFA users to expect a downward move in the position of Standard in with-profits projection comparisons because of the cost of guarantees and loss of mutuality benefits.
The fall comes as Standard admits a 2.25 per cent fall in projection rates on unitised pension policies with a 4 per cent guarantee as it cuts out mutuality bonuses and shows new guarantee fees and lower growth rates that reflect reduced equity exposure.
Last week's results saw a reduction from 7 to 6 per cent in the intermediate growth rate for unitised pensions with a 4 per cent guarantee. It announced a 0.75 per cent guarantee charge last month and is barred from showing a 0.5 per cent mutuality benefit, making projections 2.25 per cent lower overall.
O&M says the new projection rates leave IFAs facing the task of explaining huge drops in projections when clients next receive statutory money-purchase illustrations.
O&M director Jason Wykes says: “Clients will get their SMPI projections and they will certainly look worse than it did a year ago. For those clients that spot the difference, it will be interesting explaining why.”
Standard Life managing director, marketing Simon Douglas says: “Projections will be significantly lower than they were before. Removing the benefit of mutuality puts us on the same level as the plcs.”
Richard Jacobs Pension & Trustee Services director Richard Jacobs says: “Standard got the business in the first place because they were top of the tables and the charges were low, as did Equitable Life. To say they didn't is simply incorrect.”