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No consensus on personal accounts charging structure, says Pada

The Personal Accounts Delivery Authority has revealed there is no clear consensus from the industry on the charging structure that should be adopted for personal accounts.

The consultation responses published today show there is limited support for a joining fee plus a contribution charge as respondents were concerned that this could encourage employees that are auto-enrolled to opt out.

Responses that favoured an annual management charge-only structure said it was simple and transparent and could encourage participation in the scheme.

Those if favour of an AMC plus a contribution charge argued that it would be more sustainable and better able to cope with different business risks.

Pada says there was general support for the idea of additional charges for particular activities to keep down costs, however respondents argued that the scheme should be kept simple in order to reduce the need for these charges.

Chief executive Tim Jones says: “Although there is no clear consensus about which charging structure would be best, there is agreement about the qualities the charging structure will need to help personal accounts succeed in its ultimate goal – that of achieving adequate retirement outcomes for more people.”

He adds: “Stakeholders agree that the charging structure will need to be fair, easy for scheme members to understand, to help members to secure good retirement outcomes and to ensure that the scheme is sustainable.”

Pada says it will consider all submissions before making recommendations to the Department for Work and Pensions later this year.

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