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Surge back into Serps is forecast as rebates plunge

Contracting-out rebates are predicted to fall about £1bn short of the value of staying in Serps, driving millions of workers back in to state provision, according to actuaries William M Mercer.

Mercer says the rebate levels for contracting out which are due to come in from April are not high enough to match Serps and estimates the difference to be around £1bn a year.

The company reckons that at least three million people will contract back in to the state.

Senior industry figures are calling on the Government not to wait the statutory five years before revising the rebate levels.

IFAs say they will advise clients to contract back in but expect many will be put off by the uncertainty of future Government provision and will keep their private provision.

Scottish Equitable pensions development director Stewart Ritchie says: “We are going to see a very significant cessation of contracting out in the next year. The Government called the industry&#39s bluff when it set such low levels but the industry was not bluffing. The Government should be prepared to admit that it has got it wrong and act quickly.”

Richard Jacobs Pensions & Trustee Services director Richard Jacobs says: “I will have to tell my clients to contract back in. But none of the state benefits is secure and if they take the political view they may well want to stay where they are.”


SecureHealth mixing six levels of PMI cover

SecureHealth is offering a private medical insurance plan called Options which provides access to all grades of private hospitals without charging any additional fees for access to the best hospitals. It is underwritten by Legal & General and allows individuals to tailor their plan to suit their needs and budget.There are six levels of cover […]

Co-operative Bank chooses FTSE4 Good

Co-operative Bank has introduced a guaranteed offshore bond that tracks the FTSE4Good UK 50 index for five years.The FTSE 4Good UK 50 index is one of a series of socially responsible indices established by FTSE in July 2001. It contains 50 of the largest socially responsible companies in the UK, which are also listed on […]

In GAD we trust

The Financial Times of January 30 quoted the Department of Work and Pensions as stating: “The rates of rebate (for contracting out) adopted from April 2002 were assessed by the Government Actuary as sufficient to provide a fair reflection of the cost of providing the state benefits forgone…..Changes in the economic conditions would not have […]

Aegon paper on uniform renewal system

Dutch giant Aegon has put forward a paper looking at the options for moving IFAs to a uniform renewal commission system. The paper was presented at a Sofa conference in December to other life offices and IFAs. The group is believed to have included Prudential, Axa Sun Life and Legal & General among others.

Greg Broomer 2

Survey looks at the challenges facing businesses post auto-enrolment

A survey conducted by Johnson Fleming at the Pension & Benefits Show 2014 highlighted the key challenges faced within organisations post auto-enrolment. The results showed that communicating the changes and the value of them to staff, and receiving timely data from the payroll provider proved to still be the most challenging aspects of managing an auto-enrolment scheme.


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