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ABI slams 2016 delay for personal accounts

The Association of British Insurers has hit out at a new delay to pension personal accounts which means that the scheme will not be in full operation until late 2016.

The Government has confirmed that auto-enrolment of all employees and full employer contributions into personal accounts will not be achieved until October 2016.

The timescale for the implementation of auto-enrolment, as revealed by Money Marketing last month, will now be three years instead of 18 months – from October 2012 to October 2015 – to give employers and administrators more time to complete the process.

The Department for Work and Pensions is also pushing 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.

ABI director of life and savings Maggie Craig warns that the delay could undermine the scheme. She says: “It was always understood that some phasing was necessary but the four-year delay before contributions rise to 3 per cent is unacceptable.”

In the paper released last week, the DWP says the move “strikes the right balance between getting people into saving as quickly as possible and minimising the operational risk associated with the reforms”.

Pension consultant Ros Altmann says the delay to the implementation of auto-enrolment offers an opportunity to rethink the personal account scheme altogether.

Altmann says: “Instead of delaying the implementation beyond the next Parliament, far better to address the problems that are already obvious before even more time and money are wasted on a policy that has the potential to make pension provision worse rather than better.”

Liberal Democrat Shadow Work and Pensions Secretary Steve Webb says: “Labour’s flagship pension scheme for people on low pay is unravelling before our eyes. It will be six wasted years before the full rate of contributions is in place, which means that many pensioners who already face a retirement in poverty will suffer unnecessarily.”


European plan aims to give risk warning

The European Commission is planning to create three pan-European bodies, including a new European systemic risk board, to detect risks across the financial system as a whole.


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