Work and Pensions Secretary John Hutton says appointing a board of trustees to run pension personal accounts will be critical if the scheme is to be a success.
Speaking at a National Association of Pension Funds conference in Manchester last week, Hutton set out his proposals for a trust-based occupational pensions scheme run by trustees, who will set the strategic direction for the scheme including collection of contributions, investment of assets and payment of benefits.
Hutton emphasised that personal accounts will be run independently of government and the trustees will also have responsibility for deciding on the choice of funds and the appointment and management of external fund managers.
Hutton said: “Personal accounts will be the biggest step forward for workers seeking to build up a pension since National Insurance was introduced in the 1940s.
“But if we are to make them a success for the millions of people who currently are not saving for a pension, we must put in place measures to ensure they have the interests of future members at their heart.”
The Government has also announced it will be establishing a members’ panel to ensure their views were taken into account by the trustees running the scheme.
Hutton said: “The panel could nominate a proportion of the trustees and would be consulted by trustees on key decisions, providing them with access to the views of members, and a stronger sense of collective ownership.
“Given the scale of personal accounts, I believe such an approach could be absolutely critical to the success of the scheme and increasing confidence across the whole pension industry.”
Syndaxi Financial Planning managing director Robert Reid says: “The reason that they want the trustees to run the scheme is so they cannot be blamed if it all goes belly up. Also, if you are an ethical investor, you are going to have no choice on where your money is invested, which will be an issue.”