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IMA again slams charge cap as it pushes for retirement Isa

The Investment Management Association hit out at the 1 per cent regime again this week, urging the Government to adopt the idea of an uncapped “retirement Isa”.

In a letter to head of the Department for Work and Pensions&#39 pension simplification review Alan Pickering, IMA chief executive Richard Saunders criticised stakeholder&#39s 1 per cent charging cap for imposing a “straitjacket” on providers within which financial advice could not be incorporated.

Saunders said the Government should instead consider the introduction of a retirement Isa but resist “the temptation to impose maximum charges to investors”.

The retirement Isa would have all the benefits of a regular Isa and would be adaptable for use as a personal pension, employer-based occupational scheme or for topup savings above an occupational scheme.

The product would be des-igned principally with the idea of open-ended mutual funds in mind but it would also allow investment in other funds such as investment trusts and unit-linked life funds.

Saunders also calls for Pickering to undertake a dramatic simplification of the pension tax regime, saying the current system, which was designed in the days of 98 per cent marginal tax rates, has not changed to accept the lower risks in today&#39s environment.

Saunders says in his letter: “Clearly, thought would have to be given how this (the ret-irement Isa) would sit with the stakeholder regime.

“But serious simplification would require unification of the two regimes rather than separate products provided by life and fund companies respectively.”

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