View more on these topics

ABI fears Govt is ‘fixing’ low NPSS charges

The Association of British Insurers says it hopes the Government is not trying to manipulate the system to achieve its low-cost vision for personal accounts by raising the contribution cap.

Deputy director-general Stephen Sklaroff is concerned that, by increasing the annual cap from £3,000 to £5,000 in the second Pensions White Paper, the Government is trying to boost the money going into personal accounts to keep down the annual charge to between 0.3 and 0.5 per cent.

Speaking in advance of the second reading of the Pensions Bill this week, Sklaroff says figures from the Turner Commission show that an annual contribution cap of £3,000 would capture people earning up to £35,000 or 80 per cent of UK workers.

He says the £5,000 cap will capture people earning up to £68,000 a year based on 0.8 per cent total contributions.

He says raising the cap to target higher earners is inconsistent with the Government’s stated aim to protect existing pension provision and target non-savers on lower incomes.

Sklaroff urges the Government to use the £4bn a year saved by abolishing contracting out of defined-contribution schemes to encourage saving.

He says: “We hope the Government is not deliberately trying to fix the system so more money flows into personal accounts so it can keep down costs to artificially low levels. The raising of the contribution cap to target higher earners is completely inconsistent with earlier pledges to target people on lower incomes. Our industry cannot be forced to compete with a subsidised system.”

Scottish Life head of communications Alasdair Buchanan says: “I am surprised the ABI agreed to £3,000 because even then there is a serious risk of damage to existing pension provision.”

Recommended

Stampede sees pegged-rate loans withdrawn

Lenders are withdrawing fixed-rate deals by the bucketload as many have run out of funds after a surge in demand that followed last week’s shock base rate rise.At least 17 lenders had withdrawn fixed deals or signalled their intention to do so as Money Marketing went to press, with more set to follow, after a […]

All wrapped up

Clients’ portfolios can be valued, reviewed and managed online within a fund supermarket.

Jelf hires John Hiew to consult on private client proposition

Jelf Group has hired John Hiew on a consultancy basis in a bid to grow and develop its private client proposition. Hiew, formerly managing director of Clerical Medical Financial Services, will focus on existing services for new and current private clients to grow the group’s funds under management. He will report to group chief executive […]

Barnes takes up CEO title at BestInvest

BestInvest has announced the appointment of a new CEO today with founder and controlling shareholder Nigel Spiers passing over his responsibilities to newly recruited Andrew Barnes.

The Day of (B)reckoning

A period of exceptional uncertainty started last Friday for the UK, including a fierce leadership battle in a deeply divided Conservative party, the timing of the trigger of the EU’s Article 50, as well as a potential referendum in Scotland, and Northern Ireland. Click here to read the full article

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment