Shake-up stirs pension term assurance, expert claims

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Financial Services > Pensions > News

Shake-up stirs pension term assurance, expert claims

Tue, 10 Oct 2006

The government's reform of the pension system, which culminated in the Pensions White Paper, has resulted in a significant increase in take-up for pension term assurance, according to new figures.

A life insurance product, which can carry tax relief of up to 40 per cent on premiums, pension term assurance has seen sales rocket in the six months since the pension reforms, claimed HSBC.

The policies now account for 84 per of all life-only insurance products sold by the bank.

Furthermore, HSBC claims that the public's positive response to pension term assurance may have surprised many, as some parties were unsure if it would prove popular.

Dennis Smith, head of insurance products at HSBC, said: "For most customers, and almost certainly anyone earning less than £75,000 a year, a pension term assurance policy will very likely be the best option.

"It is not common for Gordon Brown to be this generous but in this case he is effectively offering to pay up to 40 per cent of your insurance premium for you."

The government's reform on pensions involved a restoration of the link to earnings, to be offset by raising the retirement age to 68.

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