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Diggle is not to be taken lightly

You awful people in the retirement industry have embroiled yourselves and your investors in a “complex monopoly”, according to influential Inland Revenue official Paula Diggle.

Translated, we think this means IFAs and insurers are using a combination of generous commission, withprofits hocus pocus and polarisation to stitch up the retirement market.

Perhaps this is a harsh interpretation of the comments but they should not be taken lightly. While at the Treasury, the same civil servant said she was unhappy with the inflexibility of tied advisers and the opaqueness of with-profits contracts – views clearly echoed in CP121 and in the Sandler review. For all the resentment the industry may feel about Diggle&#39s perceived inflexibility, she serves as a barometer of Whitehall thinking. She may even be saying what ministers really think.

But while this newspaper believes the playing field between life insurers and fund managers needs independent examination, it is not fundamental to any perceived failure of retirement policy.

The greatest challenge comes from a changing economic situation, as Diggle rightly noted. But it has been made worse by changes in policy which removed tax credits and created a new stakeholder pension with commendable aims but which imposed a severe price cap.

Turning the industry upside down on the basis of grand conspiracy theories is all very well but it will not get people saving. That will need an honest appraisal of the problem and what it will cost to fix. Then some tough decisions should be made.

It would be disgraceful if the pension industry and advisers, in particular, are made scapegoats for a failure of policy.

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