The Association of British Insurers (ABI) has welcomed the announcement by the Department for Work and Pensions that the government will allow Market Value Adjustments (MVAs) on stakeholder pensions, but has still expressed some concerns.

The ABI described the decision as a “welcome move” that will “avoid uncertainty” for thousands of stakeholder pensions customers.

“It is encouraging that the government has listened on the important issue of stakeholder pension MVAs,” said Francis McGee, head of regulation and strategy at the ABI.

“This safeguards a key principle of fairness in with-profits policies for the many current and potential future with-profits stakeholder customers. It’s also a welcome acknowledgement from the government that MVAs and good value for money are not contradictory.”

However, Mr McGee added that the combination of product regulation and selling rules will make it difficult for the insurance industry to reach new savers efficiently, saying that “the supposed ‘light touch’ regulations have turned out to be ‘medium touch’ at best.”

The new regulations were announced on March 14th by pensions minister Malcolm Wicks.

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