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ScotLife sets benchmark tests for pension reforms

Scottish Life has published a template to measure impending pension reforms and has received backing from influential thinktank IPPR.

ScotLife did not make an official submission to the Pickering review, believing its scope was too narrow. But it has now published its own paper which it hopes will influence the Government&#39s Green Paper, expected in the autumn.

With Pickering and the Inland Revenue due to report imminently on a package of proposals to simplify pensions, ScotLife says its paper will act as a benchmark to test whether their proposals will achieve simplification.

It describes four tests which it says need to be met. The first is an applicability test. This sees the current system ringfenced for the wealthy, so they are unable to exploit improvements.

The company says a new simple system for everyone else could then be set up. All the old rules should be scrapped, but people would be allowed to take all the best benefits of their old scheme with them. This is the transition test.

The third is a fairness test. ScotLife says pensions are currently not suitable for all people because of the interaction with the means-tested state benefit system. It says simple products alone will not necessarily be suitable products and the system must be fair above being simple.

The final test is for all three current regimes – occupational, individual and state pensions to co-exist without any limitations in a truly concurrent environment.

Head of pensions strategy Steve Bee says: “These four general principles are, in our opinion, the only benchmark against which a &#39simplified&#39 pension system can be judged.”

IPPR research fellow Richard Brooks says: “This deserves attention of all those interested in exploring solutions to our pension problems. It should also be read by those who undertake the currently perilous business of advising savers and providing them with products.”

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