To avoid creating two government regulated pension products the Government has outlined proposals, i...
To avoid creating two government regulated pension products the Government has outlined proposals, in its consultation document on simplified products, to include the existing stakeholder pensions within the wider Sandler suite of products.
In the consultation document, Proposed product specifications for Sandler "stakeholder" products , which was released today by the Treasury and the DWP, the Government outlines its proposals for a pension product to be included in the stakeholder suite of products.
In his review of simplified products Sandler recommended that pension products should have strict limits on features to ensure simplicity, a capped annual charge and limits on investment risk.
As the existing stakeholder pensions, which were introduced in April 2001, meet most criteria bar the investment restrictions, the Government has put forward two proposals for bridging the gap between the existing stakeholder pension and the new Sandler stakeholder product.
The first option is to make stakeholder pensions offer a single 'Sandler' investment restricted fund which would mean that providers would need to launch a new stakeholder product and rebadge their previous stakeholder pensions as traditional personal pensions.
The Government concedes that this would be the most simple approach, but it says that investors who have been sold an existing stakeholder pension would still need to be told why a 'mark 2' had been created and how stakeholder protections would no longer apply.
The Government favours the second approach which is to bring stakeholder pensions within the Sandler regime by using the already existing default investment option.
The Government has proposed 3 ways of imposing investment restrictions:
The government is welcoming responses to the consultation document by 2 May 2003.
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