SMALL BUSINESSES could receive a government subsidy to ease the pain of having to pay a 3% contribution to employees' pensions under the Pension Commission's proposals, Adair Turner, has told The Financial Times .
In an interview with the paper, Lord Turner - the commission’s chairman - signalled his readiness to seek a compromise with Gordon Brown which would make the commission’s proposals less expensive between 2010 and 2020.
The commission’s final report was not “a bible”, he said, but now believes the government will back its core proposals for a higher basic state pension, a later state pension age, less means-testing and a national savings scheme with automatic enrolment.
But, there are two remaining “big issues”, he said. First, the burden of the proposed 3% contribution which employers will have to make where employees opt to remain in the national savings scheme. Second is the cost of increasing the basic state pension in line with earnings rather than prices.
Compulsory employer contributions could raise labour costs for small businesses by 1%, Lord Turner suggested to the paper that the government could pay a subsidy for the contribution, which would help small firms at little cost to the Exchequer as there are cash flow savings to the government from the commission’s proposed reform of the state second pension.
AVIVA, BRITAIN’S biggest insurer, will weigh into the £320bn bulk annuities market within months, breaking the stranglehold of its two biggest rivals, reports The Times.
The insurer is thought to be planning to launch its new business as early as March, initially taking on chunks of pensions business worth up to £150m at a time.
Legal & General and Prudential currently dominate the bulk annuities market, enabling them to set the prices paid by companies to offload their pension liabilities.
Aviva is also believed to be researching the possibility of buying companies’ final-salary schemes. Bankers are attempting to develop a market for the schemes, as companies become increasingly desperate to offload the pension fund deficits that are hampering corporate transactions.
But Aviva’s research is thought to be at an early stage, with any purchase unlikely before 2007.
THE REMAINING papers are discussing the announcement by Legal & General which says its retail sales have increased by 29% to over £1bn in the last year.
According to The Scotsman, Legal & General grew its sales more than three times as fast as the overall UK market last year, although investor reaction was muted due to what one analyst described as the "poor quality" of some of the business it was attracting.
The insurance giant said it had capitalised on the rising stock-market, a healthy pensions debate and a growing appetite for saving as new UK retail sales jumped 29% to over £1bn.
L&G has grown into the UK's third-biggest life assurer through organic growth, and Breedon said the company would continue to eschew acquisitions - despite predictions that the industry is set for a wave of consolidation.
MEANWHILE, LEGAL & General also declared Britons appear to have caught the savings bug after swamping themselves in debt, as it revealed savers invested a record £24bn in its products last year, reports The Guardian.
Tim Breedon, the new chief executive, also reported an upturn in customers buying products online, a phenomenon the insurer had not experienced since the dotcom stock market boom.
He pointed to a new willingness among customers to buy savings products online, essentially without investment advice, as a sign of increasing confidence in the stock market.
Less than a month into his new role, Mr Breedon said the sales figures for 2005 should show that L&G was no longer a pure life insurer, with its fund management arm now managing more than £200bn of assets on behalf of clients - probably more than any other UK fund management firm.
A record £17bn of funds were poured in to the fund management business last year, matching the experience of its rival Prudential, which earlier this week said its fund management arm, M&G, had experienced a record 2005.
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