View more on these topics

Thinktank warning of opt-out rise

The Centre for Policy Studies has warned that the Government might make auto-enrolment compulsory, as Nest’s cautious investment strategy and the current economic conditions are likely to lead many people to opt out of the scheme.

Speaking at the Tax Incentivised Savings Association annual conference in London last week, CPS research fellow Michael Johnson said CPI inflation stands at 5 per cent and Bank of England’s bank rate is 0.5 per cent, creating a 10:1 inflation-to-interest-rate ratio that is unparalleled in UK history.

He said: “Combine Nest’s ultra-cautious default fund strategy with that inflation-interest-rate picture and what is going to happen? We are almost certain that within a few years time there will be many people in Nest who have lost capital, so opt-out rates will start to soar, the Government will start to panic and in a kneejerk reaction it will introduce compulsion. That is a realistic prospect.”

In November, pensions minister Steve Webb defended Nest’s default investment strategy which aims to return CPI plus 3 per cent. He said the strategy is aimed at young people and is intended to make returns early on to build confidence in the scheme.

Webb also indicated that he does not want to make auto-enrolment compulsory because going into a pension is not always the right option.

Recommended

7

Government reveals MIG scheme lenders

The Government has revealed the names of the lenders that have signed up to its indemnity scheme announced today as part of its housing strategy. It says Barclays, HSBC, Lloyds Banking Group, Nationwide, Royal Bank of Scotland, Santander and Yorkshire and Clydesdale Banks have agreed in principle to participate in the scheme, which will see […]

16

Government unveils mortgage indemnity scheme details

The Government has announced details of its mortgage indemnity scheme to help first-time buyers of newly built properties to borrow up to 95 per cent of the value of their home. At the CBI conference in London today, the Government is setting out a series of measures aimed at kick-starting the mortgage market. With banks […]

19

Cicutti: Should an IFA offer advice on will dispute?

Forgive me if, for once I ask your opinion rather than tell you mine. I have been on a quick holiday, having been made an honest man of, but while I was away my mind could not help wandering to a query raised by some friends just before I left. All too often, problems you […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com