IFAs should use the Statutory Money Purchase Illustrations (SMPI) which will be sent to clients afte...
IFAs should use the Statutory Money Purchase Illustrations (SMPI) which will be sent to clients after 6 April to review their customers' pension charges, recommends Legal & General.
Some customers are likely to be concerned when they will see what they, in the end, will retire on, and are going to want to ensure that they get the best deal as possible says Andy Agar, director of Legal & General.
One of the issues most likely to be raised as a concern by clients is the charging system of some of the older pension plans which have now accumulated substantial funds.
Changes to pensions mean they may now carry a low stakeholder single charge, which is likely to be set at a maximum of 1% per year. This way of charging gives the customer great value for money for the first couple of years when their pot is small.
However, as their assets grow, the charge will start to take a hefty bite into the customer's fund because it takes such a large proportion of the fund.
IFAs are also likely to come across clients who may be considering contracting back into the State Second Pension (SSP) and who also want to ensure that they will get the best deal, says L&G.
However, whether this will be feasible or not will be difficult to establish, as there is no single rule to contacting back in and doing so requires each case to be looked at individually.
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