Standard Life head of pensions policy John Lawson, along with IBM and representatives from the UK’s other major pension providers that make up the Plan B group, are lobbying poli- ticians, claiming the industry is no longer buying in to the current pension reforms.
Lawson says the group, which Money Marketing first made public in October, is not developing an alternative to personal accounts but wants to raise important concerns before lasting damage is done.
He says: “There is still signi- ficant disquiet about a lot of issues across the board. There are between two and three million people contributing to individual personal pensions and if they all switch to personal accounts that is a hell of a cost to the industry. We cannot afford to lose those contributions. There are potential ways around this but they have not been properly explored.”
Lawson says the group also believes an 8 per cent total contribution is too low and is demanding that basic earnings rather than banded earnings should be used to calculate contributions. He says: “We do not accept that banded earnings is the way ahead. There is no consensus there. It is bad for low-earners and creates huge difficulties for existing pension schemes.
“The big question is whether 8 per cent is enough. It is almost certainly not enough for 95 per cent of the population. It is woefully insufficient. It should be increased incrementally beyond 8 per cent. Why not just continue to increase it in increments up to 9 per cent, then 10 per cent?”
Informed Choice managing director Martin Bamford says: “Additional pressure from a group like this for radical changes could be the thing that pushes personal accounts over the edge and makes the Government realise this is more hassle than it is worth. They need a new solution that actually works.”