View more on these topics

Scottish Widows calls for initial charge on Personal Accounts

Scottish Widows says introducing an initial contribution charge on Personal Accounts could reduce setting up costs by up to 75per cent.

In its response to the Government’s White Paper on pensions reform, the firm says the plans for Personal Accounts are generally coherent but says the proposed 0.3 per cent annual management charge needs to be at least doubled to avoid the danger of future cost increases or ongoing taxpayer subsidies.
Echoing the ABI’s stance, Widows says a single AMC charge cap is inappropriate and will give rise to a projected initial capital requirement of between £1-2bn to establish Personal Accounts for between 6-9m individuals.
It says by including an initial contribution charge of the first month’s premium spread over the first 12 months of a Personal Account’s existence, the capital requirement could be reduced by up to 75 per cent.
Naismith also says there is a real danger savings levels will deteriorate significantly prior to the introduction of Personal Accounts.
He says this could be as a result of consumers misguidedly delaying investing in a pension on the basis that Personal Accounts represent a “better deal”.
He says its is vitally important that Personal Accounts do not undermine existing savings levels and lead to levelling down of existing employer contributions, causing a mass exodus from employer schemes to Personal Accounts.
Widows accepts the Pensions Commission’s proposed £3000 contribution cap and says there will be no facility to transfer existing assets into Personal Accounts.
Widows also argues there should be a significant reduction in future levels of means testing.

Recommended

FSA fines The Carphone Warehouse £245,000

The FSA has fined The Carphone Warehouse £245,000 for not treating customers fairly in sale of GI products and failing to inform the regulator in a timely manner of significant systems failures.The FSA says an investigation between 14 January and 24 October 2005 found The Carphone Warehouse failed to send 118,000 customers who bought mobile […]

Northern Rock launches new range of fixed rate bonds

Northern Rock has issued its latest range of fixed rate bonds for one, two or three years requiring a minimum deposit of 1.The three new limited issue bonds will offer guaranteed returns at a rate of 5.5 per cent gross per annum and will be fixed to October 1 2007, 2008 and 2009 respectively.From today […]

Structured argument

Banks are keen to stress the benefits of structured products. Many clients seem to agree as a recent report from BNP Paribas showed that global retail sales of structured products grew by £15.8bn in 2005 to exceed £155.4bn.

Nobody expects the Spanish Inquisition

Paul Fidell, Head of Business Development (Investments), writes about one of the primary challenges for those involved in estate planning. He looks at dealing with investment uncertainty in these low growth, low inflation but still volatile investment conditions. Protection of capital, to leave something for beneficiaries, is a fundamental objective of many people’s plans for […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment