There must be something about pensions that adversely affects politicians in this area.
As Scottish Life head of pensions strategy Steve Bee points out, Hain’s replacement former Culture Secretary James Purnell marks the thirteenth change of ministers at the DWP in just ten years.
Apart from resignations and arrests, the big news in pensions this week was the Personal Accounts Delivery Authority’s charging structure consultation.
Pada is keen to stress this is not a consultation on the level of charges because the charges will depend upon a number of factors including the final design of the scheme, its costs and the source of finance used to set up the scheme.
There are a number of options in the frame which include using an annual management charge, a contribution charge, a joining fee or a combination of these proposals.
The Association of British Insurers is proposing a contribution charge in addition to the AMC as “the only fair and practical solution”.
It says a hybrid charging model will help to make personal accounts financially sustainable as an AMC would generate very little income in the initial years after 2012.
The Pensions Policy Institute says that no single structure or combination of charging structures would meet all of the criteria originally proposed by the Government.
It says a compromise will be inevitable when choosing any solution.
Aegon head of business regulation Steven Cameron says: “It is encouraging to see a clear acceptance that a flat annual management charge isn’t the obvious starting point. But I’m puzzled as to why Pada believes there are commercial sensitivities over publishing its financial modelling.
“There is strong potential for a timing mismatch between charges received and costs incurred. Pada faces upfront costs in establishing the personal accounts scheme which may only be recouped over the longer term. Undue focus on a flat annual management charge structure or on keeping charges low at the outset could build up financial pressures for the future which could push up the costs for members at some later date.”
Friends Provident announced today it was selling its 53 per cent stake in F&C, high-net worth IFA firm Pantheon and wealth management arm Lombard and ceasing development of its wrap.
After a strategic review the firm has decided to focus on the life and pensions market and move away from wealth management.
Friends Prov also announced its new business results for 2007 and expects its profits for the year ending December 31, 2007 to drop to £300m, compared to £509m in 2006.
This is in part due to a £160m persistency charge the firm has announced it is to pay because of low persistency levels.
But there was some good news for Friends with the announcement that Standard Life head of UK retail Trevor Matthews has quit to join the provider.
Matthews will replace former CEO Philip Moore who resigned in November after the failed merger with Resolution.
Matthews joined Standard in 2004 as life and pensions chief executive, leading the dramatic restructure of the firm’s life and pensions business.
He was front-runner to take over from group chief executive Sandy Crombie when he stands down. Crombie will take on Matthews’ responsibilities for an interim period.