Darling to delay personal accounts launch by a year
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The Chancellor is expected to push back the introduction of personal accounts by one year in his pre-Budget report today.
The move is understood to be part of Darling’s plans to cut public spending, and it is thought the measure would save the Government between £1bn and £2bn in tax relief on the contributions.
Darling is expected to say the Government still intends to proceed with the scheme one year later.
This is the second delay to the scheme in just over three months. Money Marketing revealed in September the timescale for the implementation of auto-enrolment would be extended to three years instead of the 18 months originally agreed.
As a result of the earlier changes, auto-enrolment of all employees and full employer contributions into personal accounts would not be achieved until October 2016.
The Department for Work and Pensions was also set to push back by a year the deadline for employers to reach the full 3 per cent contribution on banded earnings from October 2015 to October 2016.
An Association of British Insurers spokesman says: “We would be extremely disappointed if this happens. We need to get a move on to improve pension provision and help people save for retirement. This sends out all the wrong messages. It would be a disasterous move.”
A Personal Accounts Delivery Authority spokeswoman refused to comment on speculation.
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Readers' comments (8)
Peter Herd | 9 Dec 2009 9:43 am
Isn't it about time that government stopped tinkering around with pensions. Is there no wonder why people do not have faith in pension schemes when governments whether Labour or Conservative keep tinkering around the system. A personal account is only a glorified personal pension contract and will only go to complicate the language that financial industry has to use already. In 2006 we had simplification of pensions which is a joke as it made it more confusing to the general public. Instead of renaming pensions as personal accounts why do we not stick to personal pensions and use the existing system instead of coming up with a complicated new system that can cost billions to implement. I think it is now recognized stakeholder system the government brought in a number of years ago has been a complete and utter failure. Instead of providing high quality advice to the masses it has only provided poor quality products with poor levels of service from large organisations only willing to sub out this administration to Third World countries like India. It's about time the government's realised giving high-quality advice costs and there are merits in a face-to-face service. It is also about time that they recognized that not every client can pay expensive hourly rates and that commission does have a place in the marketplace as long as there is no difference in commission rates between providers and enhancements by providers should be banned.
I think are right in saying that we have about 60,000 authorised individuals left in financial services giving advice. In 1989 there were over 200,000 individuals giving advice but with the introduction of FPC 12 and 3 we had a mass exodus of individuals. Surely with the introduction of RDR and the possible effect on things like personal accounts there may be a further reduction in the numbers of people giving advice in financial services. When is the government going wake up to the fact that we are in have one of the worst situations in regards to financial services advice ever as the number of authorised individuals reduces considerably. I receive regular e-mails from firms selling IFA practice is on a regular basis surely this is not a healthy situation.
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How funny!! | 9 Dec 2009 9:45 am
... yet ANOTHER ill-conceived idea by this Govnt which has been delayed/moth-balled/mis-managed, viz:
The Economy (as a whole!!)
Pensions
Pensions 'Simplification'
Identity Cards
Millenium Dome
WoT/Iraq
The FSA (RDR, etc)
etc etc
... does anyone REALLY have any faith in these jokers??
;-)
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derek t | 9 Dec 2009 9:55 am
bunch of clowns!
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Anonymous | 9 Dec 2009 9:59 am
Thought it was easier than it actually was to get clients into a 'one size fits all' box now found not quite so easy and kicked into long grass!
Wouldn't surprise me if RDR went the same way!
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Neil Cutmore | 9 Dec 2009 10:07 am
Typical of this Government to think of today at the expense of tomorrow.
I can think of a simple way of saving that money cut final salary pensions in the public sector. The private cannot afford it what makes Darling think he can?
I also have a very simple idea for role out just make it compulsory to contribute to GPP or Group Stakeholder pension scheme. Job done no new government department not outsourcing jobs to another country for something we can already do here
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SIMON MANSELL | 9 Dec 2009 10:48 am
Pity the Chancellor does not push back the introduction of RDR by ten years in order to
save Incremental compliance costs estimated (by the FSA) to be £430 million one-off and £40 million a year thereafter. IFA's according to the FSA are referred to as "short-term costs" arising from market exits by Independent Financial Advisers i.e.
and estimated 10,000 IFA and 20,000 support staff plus 2 million (plus) orphaned clients.
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Julian Stevens | 9 Dec 2009 11:11 am
Auto-enrolment into a pension plan on which no one:one advice is likely to be available is hardly a great substitute for what is really needed, namely TRUE simplification, an end to the annuity trap and inheritabilty of unspent funds in retirement.
Auto-enrolling miilions of people into a PA scheme will be of no value, in fact just a dreadful waste of time and money, if most of them un-enrol at the first opportunity. If a scheme is good enough and simple enough for ordinary people to see that it'll be worth their while to participate, then there'd be no need for auto-enrolment.
What are these stupid policy makers thinking about? They know what the problems with pensions are because everyone's been telling them for the past 10 years, but bugger that, let's do something completely different that fails totally to address any of the real issues.
And it really does beggar belief that this government's motivation for delaying the introduction of Personal Accounts is because it wants to save a couple of billion quid in tax relief.
"flagship pensions reform programme"?? What ~ like Pensions Simplification? If somebody made up this farce, you'd never believe it.
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Anonymous | 9 Dec 2009 12:11 pm
How does one address an incompetent Chancellor? "Hello Darling!"
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