The good news is the Individual Pension Account is on its way, the bad news is it does not look like...
The good news is the Individual Pension Account is on its way, the bad news is it does not look like it will be of much use to anyone. For those who think there is too much pensions complexity around already the bad news is actually good news - the plan, formerly known as the PPI and before that as the Lisa, seems unlikely to get off the ground in its present state.
The IPA does not increase contribution limits for pensions so there is no real sales angle for intermediaries, it does not broaden investment choice and looks unlikely to propel unit trust companies into the pensions market.
What the Treasury and DSS are proposing is that an individual can take out an IPA but only via a pension. The IPA will be able to hold unit trusts, Oeics, investment trusts and EU government bonds but the pension provider is under no obligation to provide such links.
The IPA is effectively an invitation to life companies to provide more multi-manager choice through their pension plans. The point is it is something providers can, and in some cases already do, provide: the likes of Skandia and Scottish Amicable are already in this market. The IPA will level the playing field for unit trusts when it comes to tax but this does not mean life companies will feel obliged to link to them.
The IPA does not appear to be particularly portable either. Since it can be accessed through a pension provider it brings with it the same issues about transfers that already exists in the pensions market.
Indeed, the consultation document envisages individual's being able to hold more than one IPA. It is hardly a flexible, personal pension plan that an individual can take from job to job.
The IPA looks more like a Treasury attempt to kick start a marketing initiative but there is little of any use in its proposals. At the same time it is adding an unnecessary layer of complexity and consumer confusion.
The IPA is being rushed through so that it can be in place for April, alongside stakeholder. In fact it is being aimed at exactly the same group of consumers. Pensions are not the easiest things in the world to explain and now there are going to be two pensions competing.
In addition, if the IPA is synonymous with multi-manager it is very unlikely it can be run for less than 1% annually. So the same group of consumers is going to be offered stakeholder, which is synonymous with low charges (and low charges are "good"), and the IPA, which isn't (but is still "good"). Explain that one if you can.
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