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The watchdog finally bares its teeth

The Pensions Regulator showed its teeth this week issuing its first financial support direction to Sea Containers which ordered them to inject at least £90m into its pensions funds or face court action.

Sea Containers, which owns the train company GNER, went into Chapter 11 administration last year and this marks the first time that the watchdog has obtained permission to demand cash on behalf of pension trustees from a company that it fears will abandon its retirement liabilities.

Commentators described it as a landmark move for the regulator, with pensions consultant Ros Altmann saying this is an important test case for the Regulator’s new powers.

The hope is that through the Pensions Regulator’s increased powers, companies like Sea Containers will no longer be able to renege on their pension promises by engineering insolvency which is great news for pension scheme members.

In other news, Clerical Medical exercised some of its own powers by announcing it will be introducing a new pension commission model designed to improve persistency rates among advisers.

The Lautro scale which Clerical Medical currently uses is being replaced with a single initial commission option and a fixed three year clawback term with changes taking effect on July 9.

Clerical says the new model is being introduced to reward advisers’ good persistency levels with better long-term fund values and higher commission, particularly for business of five years or more.

Third-way products have provoked a bit of a wrangle after Hargreaves Lansdown head of pensions research Tom McPhail criticised them for being overpriced and over-complicated.

Aspen annuities director Billy Burrows came to their defence saying that not offering them to customers is denying them choice and to dismiss them is not taking a balanced approach.

But Annuity Direct managing director Stuart Bayliss agrees with McPhail saying the flexible annuities around at the moment need to evolve before they will be worthwhile.

This is a debate which looks as if it will rumble on for some time.

But a point which few would argue with is in Prudential’s latest research which found that more than 20 per cent of women have no additional means of financing their retirement outside of their state or private pension.

The findings were all rather depressing with more than 14 per cent of workers in the UK believing they will never have enough money to retire and 20 per cent expecting to have to sell their home to help fund their retirement.

There was more bad news in Scottish Widows’ 2007 Pensions Index released this week which found that only a third of those without a current pension intend to remain in personal accounts when they are introduced in 2012.

The Index also found that if the Government introduced personal accounts today, the average amount people would be prepared to save is £29 per month – an amount which is far less than the Government envisaged.

The blows seem to be raining down thick and fast on personal accounts from all sides and we still have half a decade to go before their introduction.


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