The Treasury yesterday softened its tone on the appropriate level of charges for a proposed suite of...
The Treasury yesterday softened its tone on the appropriate level of charges for a proposed suite of new low-cost "stakeholder" savings products, reports the Financial Times.
Speaking at a seminar on the recent Sandler report, Ruth Kelly, financial secretary, signalled that the government was open to persuasion on charges for the proposed products, which include mutual funds, pension and with-profits policies. However, she reaffirmed that its starting point was the 1% cap that applies to "stakeholder" pensions.
Kelly said the government agreed with Ron Sandler's conclusion that a 1% cap on annual charges was the right place to start, as stakeholder pensions and Cat-marked products had demonstrated a positive effect on the market, and delivered a better deal for consumers.
She told industry representatives that she recognised many of them would have views on the level of any cap, but said that without concrete proposals for product specifications and for the sales regime, debate was academic.
HOWEVER, the troubled life insurance industry yesterday warned ministers that it will struggle to support the range of low-cost products at the centre of government proposals to overhaul the savings industry, adds the Times.
Senior executives from the industry, currently in the grip of the worst stock market slump since the 1970s, insisted that they could not afford to subsidise the development of a broad range of cheap and simple products while at the same time striving to repair tattered balance sheets.
On the recommendation of Ron Sandler, who was asked by the Government to boost the savings industry, the Treasury is trying to encourage insurers and fund managers to cap charges on a range of pensions, unit trusts and with-profits funds at just 1%.
Industry experts said a 1% cap on charges was not viable. Richard Saunders, the chief executive of the Investment Management Association, said: "If the Government remains rigid on the 1% cap, then it will be very difficult for the industry to realistically make inroads into the savings gap at the bottom end of the market."
ON THE BACK of this, The Department for Work and Pensions (DWP) yesterday admitted that it may not meet its aim of getting more people to rely on their own pension rather than the state by 2040, adds the Daily Telegraph.
The Government said in 1997 that it wanted private funds to make up 60% of pension provision, and state benefits 40%.
However, Baroness Hollis, minister for the DWP in the House of Lords, said yesterday at a seminar on Ron Sandler's July savings and investment review that the department's position had changed.
She said: "Over the past 18 months, the DWP has been shifting in its position to say whether we will reach the 60/40 split. We wanted to address the issue of individual pensioners' poverty."
HOUSE prices across Scotland are set to accelerate, with double-figure percentage gains while the rest of the UK property market slows down, according to a story in the Scotsman quoting HBOS.
The bank's latest quarterly housing report says that Scottish house prices rose at an annual rate of 7.3% in the three months to September. This compares with a white-hot hike of 21% across the rest of the UK.
But Martin Ellis, chief economist at the HBOS group, said: "I would not be surprised to see inflation accelerate into double digits in Scotland over the next six months.
GERMANY'S financial watchdog moved to counter speculation that the country's banks are running out of cash and said it was investigating whether rumours of problems - at Commerzbank in particular - were being spread in order to manipulate stock prices, according to the Scotsman.
Shares in German banks have taken a pounding in recent days on concerns that a wave of bankruptcies and weak business at their investment banking units could lead to liquidity problems and a sharp drop in earnings.
AND POWERGEN is to shut more than a quarter of its UK power stations, mothballing enough capacity to provide electricity for the whole of London, says the Times.
The company said the electricity market was "bust" after a price slump, and urged the Government to take action to avert a collapse in the market.
Powergen will close the power station on the Isle of Grain in Kent and the Killingholme plant in Lincolnshire.
Launched November 2018
£15m group claim
'Nothing particularly different' - expert
Firm's central hub