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Treasury sets cautious level for suite risk

The Treasury has finally published its consultation paper detailing its vision for the Sandler suite of simple products aimed at those not saving or not saving enough for their retirement.

The suite, as expected will consist of an equity-based, with-profits and pensions product although the door has been left open for the inclusion of other products including a generic financial healthcheck.

The Treasury has decided the appropriate level of investment risk for the products will be “cautious managed”, which means equity exposure will be capped at 60 per cent. This is a move away from tracker funds, which were Sandler&#39s chosen fund type with the paper saying they do not offer enough risk protection in the event of falling markets.

The existing stakeholder pensions would form the pensions element of the suite, with the risk-capped Sandler pension forming the default option within stakeholder.

Questions originally raised in the Sandler report over the future of the with-profits name were repeated in the paper as were doubts about whether guarantees can be done or a smoothing fund would be feasible under the 1 per cent price cap.

The clearest signal yet was given over the Treasury&#39s willingness to listen to arguments about the price cap with the paper saying it is commissioning independent research into how it affects the market.

Deadlines for formal responses to the Consultation is May 2, with the Treasury estimating the products could formally come to market by mid-2004.

Treasury financial secretary Ruth Kelly says: “These products will be simple, low cost and risk controlled. They are aimed at the millions of people who find financial services and products confusing, people who have the ability to save but aren&#39t currently doing so and consumers who are not attracted to or best served by complicated products.”

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