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IMA slams personal accounts delay

The Investment Management Association has slammed the Government’s latest delay to its pension reforms claiming the move could lead to greater complexity.

In his pre-Budget report yesterday, Chancellor Alistair Darling announced that employers can contribute only 1 per cent to their employees’ pensions for an extra year, resulting in members not recieving the full 3 per cent contribution until October 2017.

The move will boost Treasury coffers by £2.4bn.

But chief executive Richard Saunders says: “The further delay to the Pension Commission’s proposals for auto-enrolment is disappointing.

“By October 2017, when the new system will be fully implemented, it will have been almost 12 years since those proposals were originally published.

“We appreciate the scale of the logistical challenge ahead, and clearly, a ‘big bang’ approach in 2012 has risks.

“But both the phasing timetable and the regulatory proposals to implement auto-enrolment are risking further complexity.

“We hope the relatively simple message about the need to save more for retirement does not get diluted or obscured by the mechanics of the process intended to facilitate this.”

Friends Provident has also attacked the delay.

Head of corporate pensions marketing Martin Palmer says: “This is another shining example from the Chancellor of how to lose friends and alienate people.

“The DWP had already delayed the time it would take for employers’ contribution rates to reach 3 per cent to October 2016 and now we learn this will in fact be 2017.

“Not only will this fail the millions of people who are currently not saving adequately for their retirement but it could potentially mean the many who are currently in good quality schemes will suffer from levelling down. Surely this cannot be the Government’s intention?

“It has to act immediately to help employers to implement auto-enrolment on a voluntary basis.”
 

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. The government should and scrap these wasteful Personal Accounts and the PADA altogether – they are spending so much money(taxpayers’).
    If they must introduce minimum pension scheme contributions by employers and employees then why not utilise the stakeholder pensions schemes that most employers had to set up for the their employees in 2001

  2. Alan

    Your suggestion would be far too simple to ever be considered!

    TPR has plenty of information on SHP for employers. Guides, decisoin trees, a register etc. A perfectly capable “watchdog for work based pension schemes”. So why are they not employed to extend the current SHP regime and save us te personal accounts consultations and a brand new organisatoin in PADA?

    The problem with Kiwisaver and other national schemes of this ilk is that many of the individuals enroled in these schemes decided to opt-out with the first months. Yes they were auto-enrolled but there was nothing to stop them opting-out. So potentially, if UK savers take the same attitude, it could be a massive waste of time. I’m sure it would be cheaper/ easier to expand teh current system. Then again Labour promised this scheme first in 1998. Eleven years on and we’re still being notified of more delays to full implemenation……I think they want to leave the issue to another party to deal with.

  3. Alan

    Your suggestion would be far too simple to ever be considered!

    TPR has plenty of information on SHP for employers. Guides, decisoin trees, a register etc. A perfectly capable “watchdog for work based pension schemes”. So why are they not employed to extend the current SHP regime and save us te personal accounts consultations and a brand new organisatoin in PADA?

    The problem with Kiwisaver and other national schemes of this ilk is that many of the individuals enroled in these schemes decided to opt-out with the first months. Yes they were auto-enrolled but there was nothing to stop them opting-out. So potentially, if UK savers take the same attitude, it could be a massive waste of time. I’m sure it would be cheaper/ easier to expand teh current system. Then again Labour promised this scheme first in 1998. Eleven years on and we’re still being notified of more delays to full implemenation……I think they want to leave the issue to another party to deal with.

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