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Transfer figures show £10k boost in stake switch

The true cost of the pension transfer crisis is emerging, with life

offices admitting that policyholders could benefit by between £4,000 and

£10,000 from transferring to stakeholder-style policies.

Figures calculated for Money Marketing reveal that thousands of people

with high early transfer value pension plans could be better off if they

transfer to a plan with a 1 per cent charge structure.

This confirms that some of the UK&#39s biggest pension offices, including CGU

Life, Norwich Union, Scottish Amicable, Scottish Equitable, Scottish Mutual

and Standard Life, face losing billions of pounds as customers switch to

che aper plans under IFA advice.

For a 25-year-old paying £200 a month over a 25-year term starting on

February 1, 2000 and transferring on May 1, 2000, the gap between the

existing plan and a stakeholder-style arrangement is £9,08for Norwich

Union, £6,07for Standard Life, £5,992 for Scottish Mutual, £5,749 for CGU,

£5,062 for Scottish Amicable and £4,606 for Scottish Equitable. All these

life offices, except Scottish Mutual, have broadly agreed with the Money

Marketing calculations.

The figures underline the importance for IFAs to revisit pension clients

to ensure they have the best plan or risk losing out to predatorial rivals.

The problem has arisen because, by offering high transfer values in the

early years of the plan, providers risk not being able to recoup their

initial outlay incurred when setting up the plans.

Scottish Amicable pensions development director John Glendinning says:

“IFAs should be looking at their customers&#39 current schemes and see if the

charges are optimum in the current market. We will be making packages

available for our schemes this year, allowing IFAs to make comparisons if

they want.”

Carrington Investment Consultants head of retirement team William Sallitt

says: “Transferring makes a lot of sense if you can get the cli ent in

something similar with lower charges.”

Details, p10

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