Axa has warned of the dangers of people being allowed to save up to £5,000 per year in pension personal accounts without getting advice.
Head of pensions and savings policy Steve Folkard says the Government’s proposals to raise the annual contribution cap from £3,000 recommended by the Pensions Commission to £5,000 means people are auto-enrolled into a non-advised scheme at greater risk.
He says the Government has yet to explain how customers will be protected and considers that detailed information and guidance must be provided to people who save more into personal accounts.
Folkard has joined industry calls for the Government to lower the contribution cap to £3,000. He says: “Auto-enrolment carries some degree of risk but if we go to a larger cap, the risk of not having advice is greater.”
However, Richard Jacobs Pension & Trustee Services director Richard Jacobs says: “The general level of advice at the lower end of the market is still woefully poor so you cannot really argue with personal accounts as being an attractive to alternative products sold on a commission basis. The final version of personal accounts will be even worse for advisers and we cannot really do anything about it.”