Standard Life is wary of the Government’s announcement that personal accounts will not be subsidised by taxpayers’ money, hoping it will not backtrack on this commitment.
In the Department for Work and Pensions’ response to the White Paper consultation, it pledges there will be no taxpayer subsidisation of personal accounts, although initial advisory costs will be borne by the taxpayer.
Set up and operational costs will be borne by personal account holders through charges which the Delivery Authority will set.
The summary of responses paper says: “The Government has no intention of unfairly subsidising the Personal Accounts scheme with taxpayers’ money.”
But Standard Life head of pensions policy John Lawson says he hopes the Government will not renege on this promise.
Lawson says: “I still remain to be convinced on their commitment not to cross-subsidise. I would like to see them create an inventory of costs.
“They should not use taxpayers money to subsidise what will effectively be a single commercial organisation that will compete with other organisations. It would be highly illegal to do this.”
Association of British Insurers director general Stephen Haddrill says: “It is also a positive step that the Government decided there must be no taxpayer subsidy for personal accounts.
“This means that the potential for unfair competition, which would undermine employers’ commitment to existing good pension schemes, will be reduced.”