Press Release - 8 January 2003
PROTECTION FOR INVESTORS WHO DEFER PENSION AND CHOOSE
Investors who choose the new 'Income Drawdown' contract, to be available to Jersey residents for the first time under proposals in the 2003 Budget, will enjoy protection - thanks to special guidelines issued by the Financial Services Commission.
An Income Drawdown contract allows the investor to defer taking a pension for a number of years after their normal retirement date. Instead, they will be able to draw an income from their pension fund before converting it to a regular annuity.
But the Jersey Financial Services Commission points out that Income Drawdown contracts are complicated financial products, involve a significant level of risk, and should usually only be offered to sophisticated investors.
Richard Pratt, the Commission's Director General, says: "These contracts are suitable primarily for high net worth clients with substantial funds available for pension purposes, and involve significant set-up and management costs. It is therefore important that potential investors are properly advised on the suitability of such contracts - and that the associated risks, fees and charges are fully disclosed and understood - before making any commitment to such contracts".
"For these reasons, the Financial Services Commission has published an additional set of Codes of Practice that relate specifically to an investment adviser's role and responsibility when dealing with Income Drawdown contracts. These are complementary to the existing Codes of Practice for investment advisers."
The additional Codes of Practice have been placed in the Investment Business section of the Commission's website (Please click here) and are available for public information.
Full details of the regulations surrounding Drawdown contracts, prepared by the Comptroller of Income Tax, may be found on the States' website. While formal approval of Drawdown contracts rests with the Comptroller, anyone providing investment advice on the suitability of these contracts will fall within the provisions of the Financial Services (Jersey) Law 1998 and the Codes of Practice issued under Article 17 of that Law.
Although questions and comments regarding the structure, content and approval of Income Drawdown contracts should be addressed to the Comptroller of Income Tax, the Commission welcomes comments relating to the Codes of Practice governing the sale of such financial products. Any comments and enquiries should be addressed to Mr Nigel Woodroffe, Director of Insurance, at the Commission.
For further information please contact: