The Investment Management Association dismisses the “insurance industry model” for personal accounts as a “lottery” and backs the Pension Commission’s proposals for a centrally administered personal accounts scheme.It says default fund provision based on competing branded providers could create “a lottery” of uneven outcomes for savers as they are forced to choose the default fund for their money. It proposes establishing an independent NPSS board to take on the responsibility of looking after scheme members. Unlike the ABI, the IMA says employers should not be given any choice over provider. It says an unbundled, platform-style scheme would ensure that asset management companies, selected by the board, do not have to provide administration. The platform would build on the Government system used to administrate National Insurance to minimise admin costs and reduce the need for employers to link up with a new system. Most people would be channelled into a fully diversified default fund. This would effectively be a multi-manager fund with a diverse range of assets and investment styles and a number of different investment managers. The NPSS platform would allow as much choice of NPSS and third-party funds for those not taking the default option or as little choice, as in the default fund, as required. Asset managers would be appointed through open competition with regular re-bidding. Underperforming managers would be replaced. Like the ABI, the IMA proposes safeguarding existing pension provision with a cap on contributions and restrictions on transfers into the scheme. It also believes that the NPSS board and competitive forces would help keep ann- ual charges between 0.3 per cent and 0.5 per cent. This does not include admin costs, which it fails to predict in the submission. Spokeswoman Mona Patel says: “The insurance industry’s proposal creates a lottery for savers who have to make difficult decisions about what default fund they want to be put into. The onus is too much on the individual and the insurance industry’s proposal also fails to figure in the cost of advice.” An ABI spokesman says: “It is interesting that the IMA does not talk about administration costs. You cannot take asset management costs in isolation. Our model provides competition and choice for consumers which will help drive down costs and improve service for customers.”
Recent research by leading independent analyst Laing and Buisson shows that private medical insurance is holding firm.
Wrap and platform providers have been accused of protectionism by not allowing bulk re-registration on and off their platforms. At the Money Marketing Wrap Round Table, IFAs called on wrap providers to make the enabling of bulk re-registration a priority. Falcon Group business development manager Piers Denne said platforms are likely to develop in different […]
Darren Mackle, Consultancy View
Increase in state pension ageRather than one specific state pension age, we would prefer to see a flexible decade of retirement, during which benefits can be taken or can be delayed.The basic state pension will be increased in line with average earnings as opposed to prices, probably from 2012This is to be welcomed although the […]
By Simon Fletcher
As a chief executive officer of a business in the financial services sector, I have been dealing with the introduction of auto-enrolment for our clients for some time, but I can also speak from an employer’s point of view, having to go through the process ourselves.
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