View more on these topics

The pension message is to get out and stay out

We recently got Scottish Widows&#39 guide to contracting out (via personal pensions started before June 4, 2001) for the 2002/03 tax year.

Then we got another guide to contracting out, this one in respect of personal pensions started on or after June 4, 2001.

Then we got a third one, this in respect of stakeholder pensions although this one seems to bear identical age bands to the second guide. All figures are based on the assumption of standard commission (whatever that is for pensions these days) so presumably the age bands shift a little if the IFA takes something other than standard commission.

If standard commission is not taken, presumably, the IFA will charge his client a fee (each year) to advise him on whether he should remain contracted out and, if so, for how many years or whether he should now contract back in.

He will also outline just how the mechanics of contracting out work, the structure and workings of Serps and the SSP and how likely the assumptions on which his advice is based are likely to pan out in practice (extremely unlikely).

Just to confuse matters, various other insurers working on the same data seem to come up with different pivotal ages. Of course, the whole lot is undermined by the following important notes:

“We may change these assumptions in the future. Our assumptions do not directly correspond to those used for illustrations which are prescribed by the FSA [as if the FSA might have a better idea than anyone else anyway] or with those used by the Government Actuary in calculating rebate levels [with which the Government is constantly tinkering].”

Then, of course, we also have means testing on the way, so any entitlement to benefits under either Serps or the SSP will probably be denied to all but society&#39s financial dreg ends anyway.

To my mind, only one message emerges with any clarity from this timeand money-wasting farce – get out now and stay out for ever because the only thing of which we can be sure is that the Government cannot means test out-of-reach money in your own personal pension.

Turning to Doug Brodie&#39s letter in the January 16 edition of Money Marketing, he states that life companies like to think they know what IFAs do but that they don&#39t. I agree. There is another group of people who do not know. In fact, they appear to have less idea of what IFAs do than life companies. Even more gallingly, we are forced to pay extortionate levies for their very existence, not to mention all those hefty directors&#39 bonuses and sever-ance settlements.

The body in question is itself completely unregulated and even has statutory immunity from prosecution. Amazing. While we are on the subject, much speculation abounds over the pending early departure of Howard Davies from his post as top dog at the FSA. Is he jumping or is he being pushed?

My view is probably the former and that, if Sir Howard gave a candid reply to the question, he might well say that considering the material at his disposal, it would have been a minor miracle for anyone else to have done any better.

Unfortunately for the rest of us, the material in question (of whatever hue you feel inclined to accord it) remains firmly ensconced at Canary Wharf. And there is the rub.

Julian Stevens

WDS Independent Financial Advisers,



&#39With-profits are beating the bear&#39

Life office with-profits bonus cuts have been blown out of proportion compared with the slump in equities over the past three years, according to Bates Investment Services. Head of research James Dalby says that despite big falls in bonuses, many with-profits policies are providing a significant buffer against the bear market, with total returns falling […]

M2&#39s target

It is not in my nature to sell myself short. However, I need to clarify that M2 Financial will, in fact, not be looking to purchase “up to a 100 firms…” within the next 12 months as stated in Money Marketing (January 23). M2 is certainly ambitious but operating very much within the realms of […]

Countrywide to sue PI firm over £5.5m in payouts

Countrywide Assurance is aiming to recover £5.5m it paid out in compensation for pension misselling by its direct salesforce by suing its professional indemnity insurer. It follows PI insurer Marshal&#39s refusal to reimburse the firm, claiming that Country-wide had paid more compensation than it needed as some clients were compensated even though there was no […]

Treasury publishes long awaited Sandler consultation

The Treasury has published its long awaited consultation on the make-up of the Sandler suite of products, setting out the specifications for the products. The suite will include an equity based product, a with-profits product and a pensions product although the Treasury says there is a case for including other products within the suite. The […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm