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Standard slides from the top to bottom of tables

Standard Life&#39s with-profits pension products have plunged from the top to the bottom of pension analyst O&M Solutions&#39 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&#39s 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&#39t is simply incorrect.”

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