Government pensions officials may change stakeholder pensions legislation in a bid to maintain the 1...
Government pensions officials may change stakeholder pensions legislation in a bid to maintain the 1% world and free employers from the liability of giving employees information about their pension plans.
Evidence of intention to change stakeholder rules was revealed at an industry meeting with the Treasury on Wednesday, where industry representatives discussed the potential for Sandler's proposed suite of stakeholder products.
However, finance minister Ruth Kelly MP, also reiterated the government's intention to maintain the 1% charge cap on existing stakeholder products and the proposed Sandler range, which the Treasury hopes can be bought off the shelf without advice.
According to John Ellis, spokesman for the Life Insurance Association, the government is looking to alter legislation surrounding the information employers give to employees about the company's stakeholder plan, because many employers are uncertain what they can and cannot tell their staff.
With lack of clear guidance on this issue, industry officials point out employers can unwittingly give employees advice rather than information and could leave employers being liable for mis-selling if pension arrangements are not suitable for some staff.
Some employers have managed to get around this problem by asking their IFA to give employees additional advice, which is not paid for within the 1% cap on stakeholder.
But solving this problem will be key to plans for Sandler products as the Treasury needs to distribute products without advice if the costs are to be kept within 1%.
Alisdair Buchanan, head of communications at Scottish Life, suggests that based on comments made by Baroness Hollis at the Treasury's Sandler review meeting, the government will tell employers in more detail what they can and cannot say, rather than raise the 1% cap and include the cost of advice within it.
Further details may be revealed when the Treasury publishes a consultation paper in January on plans for Sandler's stakeholder suite.
In the meantime, a panel of industry representatives is being created to advise Treasury officials on the development of those stakeholder products.
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