Pension experts are warning that the Government has failed to address how personal accounts will be policed.
During a panel debate at Money Marketing Live in London last week, Aegon Scottish Equitable head of pensions development Rachel Vahey said the Government has not raised a debate on how employers will be monitored.
She pointed to the experience with stakeholder where tens of thousands of employers have failed to conform with requirements.
Standard Life head of pensions policy John Lawson warned that many small employers will buck the system if the Government relies on whistleblowing by employees. He said it is unrealistic to expect employees in smaller firms to whistleblow as they will fear for their jobs.
But Hargreaves Lansdown head of pensions research Tom McPhail said whistleblowing could be effective if allied with hefty fines for non-compliance.
Hornbuckle Mitchell managing director Neil Marsh predicted that personal accounts will struggle to attract savers, particularly as the market approaches the start of a rising interest rate cycle. He said many people on lower incomes will resent locking away a chunk of their earnings in a pension and will be more preoccupied with paying off debts.
The panel were divided on whether personal accounts represent a threat to advisers.
McPhail said personal accounts will theoretically act as a conveyor belt and create new clients for advisers but he was sceptical that they will work at all and said they could “do more harm than good”. He said it is crucial that the existing infrastructure is allowed to continue to service existing pension schemes.
Lawson said: “Personal accounts could be good for the IFA of 2050 but not of 2012. The rewards of these savers having a decent pot will not be there for 20 to 30 years.”