Hargreaves Lansdown pension analyst Laith Khalaf thinks it is unlikely that a Conservative Government would significantly change the personal accounts’ scheme because of the tight timescales involved.
Last week, Money Marketing revealed that IBM has set up an industry working group with leading life offices to draw up a plan B alternative to personal accounts, partly prompted by the Conservatives continuing to voice their concerns about the scheme. Tory Shadow pensions minister Nigel Waterson told Money Marketing last week that the only Conservative commitment was to providing a low-cost easy access pension scheme in accordance with the Turner proposals, and there was no specific commitment to personal accounts.
But Khalaf thinks it is unlikely that the Tories will do more than tweak existing proposals because a plan B will not be able to take the place of personal accounts fast enough.
He says: “If you look at personal accounts, Turner first suggested them in 2002 and they will not be fully operational until 2016 so there is a rather large delay in producing that. If we are then going back to the drawing board, we will be in the 2020s before it happens.”
The consortium, made up of major providers including Standard Life, Aviva, Legal & General, Friends Provident, Aegon and Prudential, has already had its first meeting. One of the tabled proposals is for a software platform where the employer or employee could choose a pension scheme from a range of pension providers and the personal accounts option.
Richard Jacobs Pension and Trustee Services director Richard Jacobs says he approves of the group because it takes pensions out of the political arena.
One solution the group is planning to look at is whether stakeholder could be revitalised.
Jacobs says he cannot understand why the Government does not use stakeholder and save on the cost of setting up personal accounts. He says: “Stakeholder works, it is good, the administration system is proven. There is so much subsidising of personal accounts going on it is obscene. It is nonsense. Why do we not just use what we already have and bring in compulsion?”