The personal accounts delivery authority launched its consultation on choosing a charging structure to pay for personal accounts today.
The consultation paper outlines a number of ways charges could be deducted including an annual management charge, a contribution charge and a joining charge.
But Pada identified the fact that different charging structures favour different potential members depending on their saving patterns. An annual management charge for example favours those who save later in life while contribution charges are more attractive for those with a full savings history, some breaks in saving or who save earlier in life.
Pada chief executive Tim Jones said: “It’s important that personal account charges are proportionate, clear and fair. If they aren’t many individuals will not save for retirement. There is no silver bullet – no single charging structure or combination of structures offers a perfect solution. I would encourage everyone with an interest in the long-term future of pensions in the UK to give us their views.”
Jones believes the Government needs to go to Brussels to change the European directive which prevents auto-enrolment into group personal pensions and said the issue of means-testing needs to be dealt with so as not to scare off people who could benefit from joining personal accounts.