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O’Brien admits ‘substantial’ state money to set up Pada

The Government has admitted that the Personal Accounts Delivery Authority will be given significant state funding, with only a long-term objective to fund itself.

At a Scottish Widows pension event in London last week, pension minister Mike O’Brien responded to concern from Widows managing director, marketing and distribution Andy Briggs by saying the Government will have to provide substantial funds to get the scheme up and running.

He said: “Once it is set up, it will operate through self-funding but the Pada board is a different matter. It is being paid quite considerable amounts. There will be state funding of Pada but, in the long term, the board will operate much like any other board of a defined-contribution scheme.”

O’Brien told delegates that he does not believe that levelling down will be a massive issue, based on Government surveys of employers.

He said: “On the contrary, employers believe that a pension is going to become a much more important recruiting tool after auto-enrolment. We think it will be introduced in such a way that employers will be encouraged to stick with what they have got.”

He said the Government wants to send a signal that 3 per cent employer contributions are a minimum and that he expects most employers to offer more.

O’Brien said: “Some people need their head examined if they do not see the opportunities that 2012 will provide because it will enable the pension industry to expand significantly.”


How Pada is exploring the challenges lying ahead

Further to the article on personal accounts last week, we would like to point out that enforcement with the compliance regime is a matter for The Pensions Regulator.

Protection is vital part of mortgage service

Given the concerns by mortgagors about being able to service their mortgage once their special-rate deal has ended, I would challenge advisers, brokers and mortgagees to prove that treating customers fairly applies to mortgagors who have insufficient protection against loss of job or illness and accident.


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