Standard Life is urging the Government to strip out layers of “unnecessary” stakeholder pensions legislation as part of the Department for Work and Pensions’ red tape challenge.
The challenge is part of a wider Government effort to abolish outdated or unnecessary regulations.
Standard Life head of pensions policy John Lawson (pictured) says automatic enrolment will make stakeholder schemes “irrelevant” and policymakers should look to ease the burdens on providers who administer old policies.
Stakeholder pensions were introduced in April 2001. The schemes were designed to incorporate a minimum set of standards laid down by the Labour Government.
Charges are capped at 1.5 per cent a year for the first 10 years and 1 per cent a year thereafter.
Stakeholder providers are not allowed to penalise members for altering contributions or transferring benefits and are legally bound to accept con tributions of £20 or more.
Lawson says: “Stakeholder will become irrelevant this year, so the Government should look to strip out any unnecessary red tape associated with it.
“Companies are spending hundreds of thousands of pounds a year proving that charges are not a fraction above the 1 per cent threshold, which is ridiculous, so the Government should ease that burden. It should also remove the requirement for stakeholder schemes to accept £20 contributions.”
Hargreaves Lansdown head of advice Danny Cox says: “Stakeholder pension rules are archaic and ripe for a Government review. Given that automatic enrolment is happening this year, it would make sense for policymakers to consider how the burdens of stakeholder can be reduced as part of its red tape review.”
Responses to the red tape challenge are due by May 10 and will be reviewed by a ministerial star chamber in autumn.