THIS MORNING'S Times newspaper says Abbey may be selling off its life assurance businesses if its gets the thumbs up from the FSA.
The bank is considering to close its with-profits funds, managed by its subsidiaries Scottish Mutual and Scottish Provident. The funds currently hold £14.3bn on behalf of nearly one million policyholders.
Whether of not Abbey will be selling off its with-profits funds depend on the outcome of discussions with the FSA, which is introducing tough new solvency rules for life businesses.
An Abbey spokesperson told the paper: “Our discussions with the FSA regarding Scottish Mutual and Scottish Provident are well progressed but not yet complete. We expect to be able to update our customers and the market by our interim results in July.”
AND AS PREDICTED by all the other national newspapers yesterday, The Conservative Party work and pensions spokesman David Willetts yesterday proposed a new radical recovery plan for the current pensions crisis, saying it could plug Britain's savings deficit.
According to the Scotsman, Willetts told a right-wing think-tank he wants to introduce a new type of government bond, linked to life expectancy.
This would increase the value of annuities by up to 10% and allow pension funds and insurance firms to reduce reserves without increasing overall government debt, he said.
Keith Gourlay, working for Mercer Consulting, told the Scotsman his organisation thought the proposals "would appear to make a lot of sense" and that it would be "looking closely" at the suggestions.
"Although the concept of a longevity-linked gilt may be attractive to pension scheme trustees if issued on sufficiently attractive terms, remember that the cost of such a gilt will ultimately have to be picked up by current and future generations," he added.
THE DAILY Telegraph also put pensions in the spotlight this morning as it reported nine in 10 members of company pensions are being "short-changed" nearly £4bn a year by the government.
Calculations made by actuaries suggest NI rebates given to members who have contracted out of the state second pension are insufficient to match the state benefits they are giving up.
They argue this is likely to cut these people's retirement income by a seventh.
Steve Bee of Scottish Life is quoted as saying: "If the Government cannot afford to pay fair rebates to people who opt out of the state scheme, can it afford to pay the benefits promised to those who stay in? Is the state scheme in trouble?"
The total £3.8bn-a-year deficit is almost four times higher than the previous estimates of £1bn.IFAonline
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