In confidential minutes from the April meeting of the Pada scheme management trustee advisory committee, seen by Money Marketing, Jones says: “We would only be able to audit what we see and we would be limited in what could be actually achieved, for example, the scheme would be able to provide an audit trial to how it received any contribution but would not be able to determine if the contribution was correct.”
Hargreaves Lansdown head of pensions research Tom McPhail says: “For this system to work credibly, there needs to be an effective method of monitoring whether employers are complying. The sooner we get clarification on how contributions are going to be policed, the sooner we can move forward.”
At the meeting, Alan Whalley of The Actuarial Profession warned that he had misgivings about a two-year timetable to design, build and test the new scheme. The minutes note a feeling that the current procurement process will take too long to allow delivery in 2012.
The committee was also concerned that the Trustee Corporation could fail to attract trustees unless they are allowed to vary charges to pay loans back to the Government.
Jones indicated that the Trustee Corporation is intended to be self-funded and said he hoped charging structures “can be moved”.
A Pada spokesperson says: “We are exploring many different aspects of how personal accounts might work and the various challenges that its design will need to address. We want to be open with and accessible to our stakeholders in finding the best way forward and the Advisory Committees provide the delivery authority with valuable expertise and input. We discuss a wide range of issues and options in these committees. However, these committees are advisory – they have no decision-taking function. It is too early to provide any definitive answers on how personal accounts will work. We will be consulting widely on many issues in the next few months, such as our investment strategy, decumulation and the scheme order and rules. Our aim is to minimise employer burden and provide a low cost scheme that will maximise returns for members.”