PLANS FOR A new low-cost savings scheme to tackle Britain's looming pensions crisis are gathering momentum in spite of objections from pension funds and the insurance industry, reports The Financial Times.
In his first interview on pensions policy since Lord Turner’s Pensions Commission reported in November, John Hutton, the work and pensions secretary, told the Financial Times its central recommendation for a National Pension Savings Scheme (NPSS) remained the government’s frontrunner because of its low annual management costs.
Insurers and pension funds have submitted alternatives, arguing the NPSS, with automatic enrolment of employees, was too “statist” and that the annual fees could not be cut to the 0.3% Lord Turner set as a target.
Although questions remain as to how contributions would be collected under the Turner scheme, Hutton said the industry had not produced a better idea. “The invitation was 'who can beat that'? And I’m not sure anyone has beaten it,” he said.
While he insists final decisions have yet to be taken on the government’s pension reform white paper due in the spring, he ruled out pressing ahead with the NPSS without the two other main recommendations of the Turner commission: a more generous state pension package and a rise in the state pension age from 65 to at least 68 by 2050.
Mr Hutton also hinted to the paper the first increase in the state pension age, to 66, could begin to take effect from 2025 – five years earlier than Lord Turner suggested.
FURTHER GOOD NEWS for savers was unveiled by Scottish Life as it maintained annual bonus rates and increased most final rates on its with-profits policies, reports The Scotsman.
The company said its with-profits fund achieved growth of 14.5% during 2005 - the third successive year of growth, but lower than some of its peers including Prudential and Norwich Union.
While the annual bonus rate remained steady at 0.25% on conventional savings and pension plans and 0.5% on unitised investments, final bonuses rose by up to 14%.
The pay-out on a £50-a-month, 25-year with-profits endowment was £47,337, representing an annualised return of 8.2%. The value of a similar plan maturing last year was £48,618, a return of 8.4% a year and just £1,281 more than this year's figure.
MORLEY FUND MANAGMENT, Europe’s biggest property fund manager, and CB Richard Ellis, the world’s biggest property consultant, have launched a €300m (£210m) fund for global investment in listed real estate securities, reports the Times.
The Aviva Funds Global REIT Fund, structured as a tax-efficient investment vehicle registered in Luxembourg, will invest in the shares of real estate investment trust-type vehicles in the United States, Australia, Canada, Asia and continental Europe and in British property companies.
It is designed to cash in on the present high demand for diversified exposure to global real estate markets. The open-ended fund has been launched with a €39m cash injection from Norwich Union’s pension and life funds. Over the next five years it is expected to grow to €300m.
The fund’s biggest holdings so far include shares in Westfield, the Australian shopping centre giant; Simon Property Group, the American shopping centre company; Starwood Hotels and Resorts; and Land Securities, Britain’s biggest listed property company.
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