| FSA says pensioners were better off in State Second Pension |
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LONDON - City watchdog Financial Services Authority said yesterday that millions of people who had moved their pension accounts to the private sector from the second state pension scheme had lost a significant amount of money and could hold financial companies liable for the same.
The FSA published a report saying that people who had opted for a personal pension scheme and moved their accounts from the State Second Pension and the State Earnings Related Pension Scheme (Serps) could lose up to £4,000 from their pension amount. At an average this amounts to a loss of £4 a week. This is the second report to question the government's role in contracting out the pension schemes. Last week, consumer organization Which? had slammed the government's policy and had asked Stephen Timms to issue a clarification. Editor Malcolm Coles, who himself stood to lose up to £800 a year said, "Given the government's stated concern over the so-called pensions' saving gap, it's high-time it gave us some clear direction on opting out, before millions lose out."
The FSA report said that investors are likely to lose money and only some lucky ones would be spared the misery. Britain's biggest insurer, Norwich Union, has become jittery in face of these two damaging reports and has said that it would ask 40,000 policyholders to revert back into the State Second Pension. However, Mike Urmston, finance director of the Norwich's UK life business said, "This is a retrospective report that focuses on what has happened, not what should happen in the future. Financial advisers are now very nervous of giving advice on whether people should contract out or whether they should contract back in." His comments found favor with Simon Douglas, head of marketing at Standard Life who said, "Despite the disadvantages we find many people prefer to stay opted out because they just don't trust the Government to keep its pension promises."
Posted
on : Tue, 23 Aug 2005 20:25 GMT | Pensions News
By : Rob Davis
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