Pension policies abandoned after two years

More than a quarter of people who bought a personal pension directly from a company representative during 1993 had suspended payments two years later, according to new figures published yesterday by the Personal Investment Authority (PIA), the industry regulator.

Barclays Life and Britannic Assurance are among the companies with the highest surrender rates, while Standard Life and Scottish Widows have some of the lowest.

Long-term pension policies are not normally expected to be cancelled early. High surrender rates may indicate the sale of inappropriate policies, often because of poor advice.

The regulator said that while the statistics showed a slight improvement on the previous year, the persistency rates - the proportion of policyholders who kept up payments - were still too low.

"The main conclusion from this survey is that too many investors have terminated their policies early," the PIA said.

The regulator plans to monitor the trends for all companies but will look in particular at some of the weaker performers to see what progress has been made with more recent sales.

The survey analysed returns submitted by life assurance companies and friendly societies on the persistency of their life assurance and pensions business.

It showed that persistency rates for personal pensions were worse than those for endowment or life products and that independent financial advisers (IFAs) have better persistency rates than company representatives.

The PIA first published the survey last year and analysed the persistency rate, after one year, of policies sold in 1993. This new survey covers policies sold in 1994, and gives a second year of data for policies sold in 1993.

The survey shows a persistency rate of 72 per cent after two years for personal pension plans sold in 1993 by company representatives. This means that 28 per cent of investors failed to make the payment due in the 25th month.

The persistency rate over two years improved to 84 per cent when the personal pensions were sold by IFAs.

While these two year rates are high they show that there were fewer lapses in the second year of a policy than in the first year.

After one year the persistency rate of personal pensions sold in 1993 was 84.0 per cent. Policies sold in 1994 by company representatives had a persistency rate of 83.8 per cent.

For IFAs, the equivalent figure was 91.9 per cent after one year for the policies they sold in 1994 compared with 92.3 per cent in 1993.

News
people Emma Watson addresses celebrity nude photo leak
News
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
News
Boris Johnson may be manoeuvring to succeed David Cameron
i100
News
peopleHis band Survivor was due to resume touring this month
PROMOTED VIDEO
News
people'It can last and it's terrifying'
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Arts and Entertainment
tv
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Life and Style
fashionPart of 'best-selling' Demeter scent range
News
ebooksAn unforgettable anthology of contemporary reportage
News
i100
Sport
Tom Cleverley
footballLoan move comes 17 hours after close of transfer window
Sport
Alexis Sanchez, Radamel Falcao, Diego Costa and Mario Balotelli
footballRadamel Falcao and Diego Costa head record £835m influx
Life and Style
fashionAngelina Jolie's wedding dressed revealed
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Web Developer/UI Developer (HTML5, CSS3,Jquery) London

£55000 - £65000 per annum: Harrington Starr: A Global Financial Service Organi...

Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

C# Web Developer (C#, MS Dynamics CRM, SQL, SQl Server) London

£40000 - £50000 per annum: Harrington Starr: A Global Financial Service Organi...

Oracle developer- (Oracle, PL/SQL, UNIX/LINUX) - Trade- London

£50000 - £70000 per annum: Harrington Starr: One of the global leaders in prov...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering