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.”