View more on these topics

Altmann warns of future litigation risk from auto-enrolment

Independent pensions analyst Ros Altmann has warned of a future risk of litigation if the Government auto-enrols all workers into the National Savings and Employment Trust.

Altmann proposes that only those earning more than £15,000 into the Nest or the Government could face legal action from those who end up worse off as a result of saving in the scheme.

In her response to the Department of Work and Pensions’ consultation on workplace saving, Altmann says just getting people to contribute small amounts to a pension arrangement does not solve the problem of inadequate retirement income.

She says that a pension may not be a suitable product for low to moderate earners, they may be better off with an Isa to avoid means-testing penalties. Altmann says that increasing the trivial commutation limit might help with this, but may not be sufficient.

She argues that the Government could be lulling workers into a false sense of security if they believe that 8 per cent of earnings will deliver a satisfactory pension income.

Altmann says: “The best way to tackle pensioner poverty quickly, especially for women, is to pay a decent universal state pension, as of right, to all citizens. Even if that is paid from age 70, 72 or even 75, at least there will be a particular age beyond which private income will be free from means-testing penalties.”

She also suggests starting by auto-enrolment into existing schemes to reduce the threat of levelling down, introducing a three-month delay before auto-enrolling employees and allowing those who know in advance that auto-enrolment is not appropriate for them to avoid being enrolled into a scheme in the first place.

Altmann says that the 2 per cent charge will make Nest’s cost advantage weak and warns that investment and annuity risks have been underestimated.

She suggests the Government should consider underwriting annuities for Nest.

Altmann adds: “The previous conclusions ignored annuity risks but if annuity rates continue to fall, then pension income will be hit, even if investments do well. Perhaps Government should issue or underwrite annuities for Nest.”


Pension watchdogs fed up with ABI over Omo stance

Pensions Income Choice Association chairman Tom McPhail has claimed pension regulators are “tired” of the Association of British Insurers downplaying the benefits of the open market option. Speaking at the Money Marketing Retirement Summit in Dublin, McPhail said he had been “encouraged” by his recent conversations with the FSA, the Department for Work and Pensions […]

Buoyant Standard plans fund developments

Standard Life is to launch a new fund proposition, encompassing a guided fund range and a range of risk-based funds. The firm announced in its interim results last week it is developing the new investment proposition to streamline its online experience and help customers obtain “simpler, more appropriate” investment solutions. It will be launched initially […]


FSA blunder “fines” 400 firms for overdue returns

The FSA has mistakenly requested a £250 fine from 400 firms who were told they owed the penalty for overdue regulatory returns. An email was sent to 400 firms yesterday which was intended to remind firms about an upcoming deadline to submit their regular returns to the regulator. Instead firms received a different email which […]


Annuity rates continue to slide

The Retirement Partnership managing director Steve Lewis offers a commentary on the latest annuity rates. A link to the latest Retirement Strategy annuity income data pages appears at the right-hand side of this article.


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. All very clever, Ros, but you’re missing a few fundamentals here. Firstly, NEST ain’t gonna happen, it’s just another Old Labour loony-toons idea that’ll never get off the ground. Secondly, the private sector isn’t going to tolerate having an auto-enrolment stakeholder scheme foisted on it (unless the latest generation of life company big nobs are as stupid as the last lot).

    A generous universal basic state pension is a nice idea but completely unaffordable until a lot of other things have been sorted out, not least the hugely expensive pensions provided for most public sector workers (including all those lavishly generous and phoney redundancy early retirement packages granted left, right and centre).

    What you should be campaigning for is genuine root and branch simplification, removal of the shackle of GAD Rates from the retirement income equation and restoration of the attractive supplements that made PP’s attractive until that asshole Rooker was let loose at the wheel of the stakeholder juggernaut. Oh yes, the government should also stop taxing dividend income and raise the means-testing threshold so that only the most comfortably well pensioned people are affected by it. All simple, all do-able.

    Carrot is better than stick.

    But I do sympathise with what you’re up against in the form of someone like Mark Hoban ~ a barrier to progress if ever there was.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm