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Standard Life slams ABI’s ban plan

Standard Life has launched a scathing attack on ABI proposals to protect existing pensions through contribution caps and limits on transfers for personal accounts.

In its response to the Pensions White Paper last week, the Association of British Insurers agreed with the Pension Commission’s proposals for an annual contribution cap of £3,000 a year and an initial ban on transferring in or out of personal accounts.

But Standard Life head of pensions policy John Lawson says: “Measures such as contribution caps and preventing transfers are so customer-unfriendly it beggars belief. The idea that putting up barriers somehow protects good existing provision is daft.

“Employers will close their schemes or level down because they cannot afford so many NPSS contributions. Petty rules about what pension you can or can’t save in will not make a blind bit of difference.”

Standard argues that people aged over 40 in 2012 and earning under £25,000 should not be auto-enrolled into a personal account as its research indicated they would be better off saving in an Isa.

Like the ABI, Standard believes that an annual management charge alone would prove unworkably expensive during the early stages of the scheme. It proposes levying 5 per cent on each contribution, which Lawson says would be cheaper than a 0.7 per cent annual charge.

An ABI spokesman said: “If others have suggestions for better ways to maintain the existing pension market, it will be useful to have these as contributions to the debate.”

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