PensionsBy Paul McMillanThe ABI, the IMA and the NAPF have set aside their differences over who should run personal accounts to warn the Government jointly that the scheme should be ringfenced from existing provision.
In a joint letter to Work and Pensions Secretary John Hutton, the three organisations say that the Government should, at least init-ially, restrict transfers between personal accounts and existing pensions and savings.
The letter also calls for a limit on contribution levels to ensure that the scheme does not cannibalise the pension market.
The bodies say that without specific safeguards, there is a risk that personal accounts could move beyond their original remit and become the dominant force in the pension market.
The letter warns the Government that the scheme could raise misselling issues as transfers can be complex and often involve individual advice.
It says pension customers outside the scheme could be disadvantaged as the general pension market would be made less dynamic and competitive, undermining the greater choice that has emerged since A-Day.
The letter suggests the restrictions could be reviewed after five to 10 years, when the effect on existing provision has been evaluated.
The letter says: “Which-ever model of personal acc-ounts is chosen, we are confident that if the Government adopts these objectives and remains focused on serving the needs of the target group, it will have paved the way for the lasting success of personal accounts.”