Lost rebates may mean Serps return

LIFE insurance companies have been ordered to contact many thousands of personal pension holders to check whether their policies are still appropriate investments, writes Paul Durman.

Lautro, the life insurance regulator, has issued its guidance because of a forthcoming reduction in the amount of National Insurance rebate that the Government pays into the pension plans. The change means older policyholders may have to consider 'contracting back' into the state earnings-related pension scheme (Serps).

Lautro is particularly concerned about lower-paid policyholders who 'will find a large proportion of the government contribution to their personal pension will disappear'. Those who contracted out of Serps have previously received at least pounds 1 a week, but this minimum will be scrapped.

Women over 40 and men over 45 are most likely to have to reconsider. Lautro said reviews would be needed in the year from April, when rebates will be cut.