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Which? claims end of RU64 will see life offices derail Turner

The abolition of RU64 will derail a centrally administered state pension system which may be proposed by the Turner report, warns consumer watchdog Which?

Principal policy adviser Mick McAteer says FSA proposals to scrap RU64 will allow life offices to charge higher commission on personal pensions, bringing a boom in profits.

He says insurers will use this to generate a war chest in advance of the implementation of Turner’s plans to tempt people on low incomes to opt out of the centralised system.

McAteer says the abolition of RU64, which forces advisers and providers to explain how their product is at least as suitable as a stakeholder policy, will leave the FSA powerless to stop campaigns from life companies promoting wider fund choice and increased flexibility.

He says: “Insurers are terrified of a centrally administered system so they will try to collapse it. They will fill their boots from increased charges and spend bucketloads of money to get the public to opt out of the centrally administered scheme.”

Standard Life head of pen- sion policy John Lawson says: “This is yet another consp- iracy theory. The market is too competitive.”

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