YESTERDAY'S PUBLICATION OF an National Audit Office report into the number of people likely to be netted by the proposed £1.4m lifetime contributions limit to pensions will be seized on by chancellor Gordon Brown to push pensions simplification in next week's Budget speech, the FT says.
The NAO says some 10,000 people will be caught out by the rule, but the figure is still within the government’s wider suggested range – and much lower than some previous industry estimates.
Uncertainties remain, the NAO’s report says, not least because the “thin” evidence relied on by the government to do its own calculations of the costs and benefits of simplification. Overall, however, its findings support the government’s move to simplify the taxation of pensions, the FT says.
The Daily Telegraph takes a different tack, suggesting that the NAO’s figures are still double previous government estimates, while quoting the British Airline Pilot’s Association as saying three-quarters of its members will be immediately hit by the £1.4m cap.
By contrast, however, just 21 of Vodafone’s more than 12,000 staff will be hit by the limit, the Telegraph adds.
MEMBERS OF PARLIAMENT are set to lambast the insurance industry tomorrow with the publication of a damning report into endowments, which will accuse firms of mis-selling such products a second time in order to get customers to pump more money into underperforming funds, The Times reports.
Insurers will also be criticised for failing to advice customers of their rights to complain, and for perpetuating a sales-driven approach to endowments, for example, retaining a link between commissions and numbers of endowment sales made.
The Times quotes Jim Cousins MP as saying insurers used so-called Red letters warning of shortfalls and marketing tools to encourage people to take out secondary endowments, instead of directing customers towards independent financial advice, which may have produced different outcomes.
TREASURY AND FSA written comments on the Penrose Report before it was published suggest they find fault with his conclusion that Equitable Life paid out too much in bonuses, even though such arguments throw the spotlight back on regulatory failure, writes the FT.
The paper quotes the Report noting that both government and regulator challenged the “over-bonusing” theory during the so-called maxwellisation period, when they were allowed to respond in writing to advance copies provided by Lord Penrose ahead of publication.
The government now says the initial response was not the full departmental response from the Treasury – which was the one treasury secretary Ruth Kelly delivered earlier this week – but the Tories point out that if over-bonusing was allowed, it still points regulatory failure, even if Penrose’ conclusion is that it was driven by failures within the company itself, the FT says.
POLICYHOLDERS AT ABBEY will meanwhile doubtless be pleased with the news in The Scotsman today that the company’s top two executives shares more than £2m in bonuses on the basis of their performance in 2003.
Unfortunately for policyholders and shareholders alike, Abbey actually reported an unprecedented second year in a row of losses as it continues to struggle with the disastrous move into and subsequently out of corporate banking.
Abbey staff got an average 6% of their salary as a bonus for the same period, but as recently as January the company axed 60 jobs in Glasgow as it ended plans to manage funds from its offices there, The Scotsman says.
FEARS OF A collapsing US housing market moved closer overnight with news that Fannie Mae, one of two US government backed mortgage lenders, may have lost more than $25bn in four years on derivatives trades, without noting the losses in its accounts.
If recognised in the accounts, the sums, which cannot be recouped, could significantly impact on the company’s ability to meet capital adequacy requirements, the FT notes.
Fannie Mae, and its sibling Freddie Mac, together back mortgages worth some $4,000bn, the FT says. Fannie Mae adds its positions on derivatives are not important because it generally holds positions to maturity.
However, many will be watching the company’s release of its annual “fair value disclosure next Monday, to see if the gap between the regulatory capital and the fair value has widened further than the $6bn shortfall reported a year ago, the FT writes.IFAonline
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