Money News
In response to the announcement by City regulator, the FSA (Financial Services Authority) that it found no obvious evidence of any mis-selling regarding people contracting out of the state second pension (S2P), Which? magazine says there has been a missed opportunity worth an estimated £780 million.
Teresa Fritz, principal researcher at Which? argues that the 120,000 people identified by the regulator, who could have been wrongly advised to contract out of the state second pension, may end up incurring a combined lifetime loss of £780 million+. Putting some numbers on it: 120,000 policies x £364 (£7 x 52 weeks) x 18 (average number of years of life expectancy of someone currently aged 65: source ONS) = £786 million.
Fritz argues the FSA figure is the tip of the iceberg. Which? calculates that the total number of people affected may be up to 4.5 million. Consequently, pensions could be seriously under funded without people even realising it.
She adds that since 2005, Which? has been asking the FSA to make pension providers supply annual statements comparing the value of their clients' contracted-out pensions to the value of the state pension given up.
10 May 2007 © Moneyextra.com
Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.