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Call for less red tape and cheaper pensions

Removing layers of red tape, rationalising the number of products on the market and making pensions cheaper for employers are at the centre of Alan Pickering&#39s regulatory overhaul.

Pickering hopes his plans to remove the obligation for employers to offer spouse benefits and to link benefits to inflation will cut the cost of offering final-salary schemes.

His proposals include a return to the pre-1988 position, where employers can make employees join their company schemes as a condition of emp-loyment.

But Pickering would req-uire employers forcing emp-loyees to join schemes to also contribute and he proposes a contribution level of 4 per cent.

Industry figures suggest this could indicate an increase in the GPP employers&#39 contribution level from 3 per cent to 4 per cent for those wanting to avoid setting up a stakeholder scheme.

Providers welcome the broad sweep of his recommendations although they point out that, without seeing the outcome of the Inland Revenue&#39s proposals for chan-ges to the tax regime, his report cannot present the full picture of a future pension landscape.

Pickering says: “It is not for Parliament to tell employers and employees whether they should have bells and whistles – it is down to employers and employees themselves. Past pension promises have been imposed by well-meaning but interfering politicians.”

Axa head of pensions Steve Folkard says: “There are good things in his report. His problem has been that the expectations of what he can achieve have been too high. For the full job to be done, we need to see what the Revenue does with tax.”

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