View more on these topics

MPs divided over Nest-style drawdown default

CMackinlay

MPs on the Work and Pensions committee are divided on the need for policymakers to intervene in the post-freedoms decumulation market.

Last week, the committee said the Government should not create a default option for savers who do not engage with their pension at retirement. It added: “Legislation for default options should only be introduced if long-term monitoring of the consumer outcomes from pension freedom indicates it is necessary.”

The last government has already intervened in the pensions accumulation phase by capping charges for auto-enrolment schemes at 0.75 per cent and creating Nest.

Speaking at a roundtable hosted by Prospect magazine last week, Conservative MP and committee member Craig Mackinlay said: “I’ve now come round to the thought that there has to be more of a default, like a fund of funds that is deemed to be pretty safe and pretty pedestrian.

“It should just about do for most people and there would be a market driven, safe fund that is the place to be, a little bit like Nest.”

Mackinlay’s fellow committee member and pensions all-party parliamentary group chairman Richard Graham maintains that the introduction of a default would mark a return to “the idea that the man in Whitehall knows best”.

Nurture Financial Planning managing director Simon Linstead says: “It just isn’t cost effective for us to deal with people with small pots but they desperately need some support, so  there could be a place for this.”

Recommended

Accounts-Paperwork-Financial-Corporate-Business-700x450.jpg

Pensions regulator launches auto-enrolment guide for small firms

The Pensions Regulator has unveiled a new step-by-step website guide designed to help small employers navigate their automatic enrolment duties. The launch of the new service comes as the industry gears up for a wave of 1.8 million employers hitting their staging dates next year. It includes information on what employers have to do and […]

Guide

Guide: how to change your auto-enrolment support

As we approach the two-year milestone of auto-enrolment, employers have had the opportunity to truly assess the capabilities of their chosen support. They are also now realising that getting to the staging date was the easy part, and that support is required for almost every aspect of the day to day running of their scheme. With the three-year re-enrolment window coinciding for many with the total removal of commission and Active Member Discounts from pension-related products and services, as well as the introduction of the pension charge cap in April 2015, many employers will have no choice but to review their support options. But, what is involved in transitioning your auto-enrolment scheme away from your current support options? This guide from Johnson Fleming aims to outline some of these key areas and provide information and discussion points on what you need to consider.

Newsletter

News and expert analysis straight to your inbox

Sign up

Leave a comment