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Hutton defends Personal Account plans

Work and Pensions Secretary John Hutton has laid the Personal Accounts White Paper before Parliament unveiling measures to tackle accusations of levelling down and claiming the scheme will see between £4bn to £5bn of new saving.
Hutton rejected Tory claims that setting the maximum contribution cap to at least £5,000 would lead to the back-door nationalisation of pension provision, describing the allegations as ‘nonsense’.
He said the Government would listen to industry fears about the size of the contribution cap-expressed today by the ABI- in the consultation process.
He claimed the reforms are designed to fill a gap in the existing market, complementing existing provision rather than competing with it and said restrictions stopping the transfer in or out of the scheme until at least 2020 would stop damage to existing provision.
Addressing concerns about levelling down, Hutton said the same argument was put to the Government when it introduced the minimum wage but fears were not realised.
On means testing, Hutton continued the Government’s recent line that the most important thing was individuals who saved in the scheme would be better off compared to if they did not save.
Hutton said the first year limit of the accounts will be £10,000 to allow individuals currently without access to a good pension scheme to save in another non-pension product before 2012 and then pass the money into the scheme.
Hutton said: “Low charges are critical to ensuring that people build up the
maximum pension fund from their savings. The Government estimates
that the long-term costs for personal accounts will be in line with
those set out by the Pensions Commission of around 0.3% of funds
under management, or even lower.
These reforms set a sustainable and sensible course. They are in the
long term interests not only of this generation, but of generations
to come.”


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