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ABI hedges cap stance

The Association of British Insurers has sidestepped the Government’s challenge of setting a charge cap for the NPSS personal accounts scheme.

In its response to the Pensions White Paper consultation, closing next week, the ABI has underlined its strong support for personal accounts but made it clear the scheme should not impinge on existing pension provision.

It supports the Pensions Commission’s proposals for a cap on contributions into personal accounts and says the scheme should be targeted at people who are currently saving little or nothing.

But having rejected the Turner Commission’s proposed 0.3 per cent charge cap and previously put forward a 0.6 per cent charge as more real- istic, the ABI now refuses to set any limit. It says competition between providers involved in the scheme will help to keep charges down.

It proposes establishing an economic regulator with the power to impose a charge cap if competition fails to deliver low charges.

ABI spokesman Jon French says: “Nobody believed that 0.3 per cent was realistic. The argument about charge caps is a false argument.”

But Scottish Life head of communications Alasdair Buchanan says: “No charge caps may be too big a step and too much of an about-turn for the Government to consider. Competition in stakeholder has driven huge capital losses at many life companies and I do not see why personal accounts will be any different.”

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