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Band could play havoc

Standard Life’s head of pensions strategy John Lawson believes the law of unintended consequences is going to see personal accounts wreak havoc with existing provision.

This may not seem like a new warning to many pension advisers but Lawson has taken Standard’s own pension scheme to demonstrate just what a difficult position scheme sponsors will be in if the billgoes through as it is.

Employers and staff face many problems. The Pensions Bill will use band earnings to judge scheme quality but Lawson says most schemes are based on full earnings, including overtimeand bonus payments.

He believes that by failing to use a definition that fits the market, it will pile many problems on to scheme sponsors.

They could, for example, face having to renegotiate pay and bonuses, in particular for lowerearning employees. Employers may find it much easier to close existing schemes to those members and put them into personal accounts. The upshot is that under this proposal the employer contribution is likely to be reduced. That is the opposite of what the reform is supposed to do – increase pension coverage.

The Government has said it does not want to compete with existing provision but Lawson says it will make a big impact.

We hope the Government listens or it is in danger of putting through a bad reform and a poor financial outlookfor many people.


Dampier defends best ideas

Hargreaves Lansdown head of research Mark Dampier is still backing Skandia’s UK and global best ideas funds after a difficult 12 months.

The right way ahead

I am a regular reader of John Greenwood’s column and appreciate the insight he provides on industry issues but last week’s article on third-way products contained a series of inaccuracies that need to be addressed.

Alliance Trust appoints John Hylands as NED

Alliance Trust is appointing John Hylands as non-executive director with immediate effect. Hylands will join the audit committee, becoming its chairman when current chairman Gordon McQueen resigns on March 31. He joins Alliance Trust after a 28-year career at Standard Life. During this time he was finance director from 2001 to 2005 and led the […]

Hudson wants to see advisers working as collectives

Paying commission encour-ages nomadic adviser behaviour and hinders business sustainability, says Tenet chief executive Simon Hudson.He told a Money Marketing RDR round table that sustainable business models are only possible if advisers build regular income streams based onhighly qualified teams of specialist or generalist advisers under a firm’s umbrella status.Hudson said client relationships should be […]

Neptune India: three stocks we’re buying & the one we’re not

By Kunal Desai, Head of Indian Equities The Neptune India Fund’s investment process serves as a key differentiating feature of the portfolio versus its peers, contributing to its significant outperformance under Manager Kunal Desai’s tenure. Focusing on industry disruption, accounting quality, liquidity and corporate governance, Kunal sets out three stocks that he’s buying in the […]


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