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Hutton sets out simple route to 0.3%

The Government is clinging to its belief that pension personal accounts can be delivered at a charge of 0.3 per cent despite acknowledging that few in the industry believe this is possible.

Speaking at an Axa fringe event in Manchester on Tuesday, Work and Pensions Secretary John Hutton said if the Government can deliver enough volume and simplicity the 0.3 per cent target is realistic.

He said the scheme would be “screwed up” if it has too many “bells and whistles” which could stop people joining the scheme.

Hutton left the door open for an industry scheme, saying he was looking at as much choice as possible within the framework, with calculations continuing at the Department for Work and Pensions.

He said the second Pensions White Paper, which is focusing on personal accounts and due to be published this autumn, is the last chance to stop the pension issue “slipping through our fingers”.

Hutton addressed industry concerns on “levelling down”, saying personal accounts would not “hoover up” existing provision and he would announce work on the DWP’s review of regulation very shortly.

He said: “The key to getting to 30 basis points is volume and simplicity in scheme design. If we can do these things and try to have as much choice in the frame limits that we can, we have a realistic possibility of getting it down to 30 basis points. But in the industry, very few people think that it can be done.”

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