The Tories have attacked the Government’s projections for the investment returns of people investing in pension personal accounts, claiming its “sloppy” calculations could result in the “mother of all misselling scandals”.
Speaking in Parliament last week at the second reading of the Pensions Bill, Tory Shadow Work and Pensions Secretary Philip Hammond said the same regulated assumptions and restrictions forced on the industry should be placed on the Government when it forecasts returns.
Hammond said if any provider made the same “£2 back for every £1 put in” statements, it could expect “the regulator’s knock on the door about five minutes later”.
He said for an open debate and to instil credibility in the scheme, especially among people affected by means-testing, the Government must be disciplined in its presentation of possible returns.
Hammond says: “I want a commitment from now on to use the same regulated assumptions and restrictions to express projections of returns to savers in personal accounts that regulated pension providers are required to use.
“We all have an obligation to ensure the Government does not promote saving that does not pay, with the potential for the mother of all misselling scandals. The issue cannot be fudged or avoided.”
Re-Financial Planning director David Hughes says: “We have to work within the rules to ensure the public are not misled and there is no justification for the Government not to do the same.”
The Tories attacked Chancellor Gordon Brown over the Government’s refusal to be tied down on when it will relink the state pension with earnings.
Hammond accused Brown of the “worst kind of manipulation” and of playing personal politics with the reforms, suggesting he will announce the relinking will take place in 2012 after Tony Blair has left to “cover himself in glory”.