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.

ebooksAn unforgettable anthology of contemporary reportage
Oscar Pistorius is led out of court in Pretoria. Pistorius received a five-year prison sentence for culpable homicide by judge Thokozile Masipais for the killing of his girlfriend Reeva Steenkamp
voicesThokozile Masipa simply had no choice but to jail the athlete
Arts and Entertainment
Sister Cristina Scuccia sings 'Like a Virgin' in Venice

Like Madonna, Sister Cristina Scuccia's video is also set in Venice

Arts and Entertainment
James Blunt's debut album Back to Bedlam shot him to fame in 2004

Singer says the track was 'force-fed down people's throats'

Life and Style
The Tinder app has around 10 million users worldwide

techThe original free dating app will remain the same, developers say

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Customer Service Executive / Inbound Customer Service Agent

£18 - 23k + Benefits: Guru Careers: We are seeking a Customer Service Executiv...

ASP.NET Web Developer / .NET Developer

£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album