Contracting out rules should be uniform across all stakeholder schemes, no matter if they are set up...
Contracting out rules should be uniform across all stakeholder schemes, no matter if they are set up under occupational or personal pension frameworks, according to Scottish Widows.
In its response to the draft DSS rules on stakeholder pensions, the group states it broadly agrees with the proposed regulations but has reservations concerning contracting out.
Ian Naismith, pensions strategy manager at Scottish Widows, said: "The draft rules mean the rebates for occupational stakeholder will be much lower than for personal stakeholder.
"The rebates for occupational money purchase schemes were significantly reduced in 1999. Many large final salary schemes had chosen to contract-out on the money purchase basis to increase the total rebates. In closing the loophole, the Government seriously disadvantaged smaller money purchase schemes."
Before the changes last year, those in final salary schemes had been choosing to go down money purchase routes to take advantage of the bigger rebates. It was this that resulted in the Government reducing the rebate rate.
Colin Watts, pension marketing manager at Scottish Widows, said: "No one does Comps (contracted out money purchase schemes) anymore because the money is better under personal pensions.
"Instead, CIMPs (contracted in money purchase schemes) are more popular and they get their members to contract out via PPs."
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