In usual ‘dance of the seven veils' style, the Government is slowly teasing us with glimpses of what the personal accounts scheme will look like.
Whilst entertaining for the pension pundits amongst us, when we eventually get to see the whole thing it may not be as exciting as those glimpses promised.
The latest tease was by John Hutton at the NAPF conference in Manchester. In his platform speech he revealed that personal accounts would be run independently of Government, with a Board of Trustees taking ultimate responsibility for setting the strategic direction.
This wasn’t, in itself, a big shock. The White Paper, issued last December, had already outlined that personal accounts would be an occupational pension scheme – somewhat bizarrely when you consider what the role and participation of the average ‘personal accounts employer’ will be.
And it’s no surprise the Government wants to put some distance between it and the success (or otherwise) of personal accounts. But the good news is that it means the taxpayer will not be the one propping up the scheme.
Existing pensions and personal accounts will compete against each other come 2012, and it is paramount they do so on an equal footing. State subsidies of any kind would go against the fundamental principle that the existing pensions market must be able to flourish in the new environment.
The other titbit John Hutton threw us was that we would also get a members’ panel, which could nominate some of the trustees, and which the trustees would consult on key decisions, providing them with access to the views of members, and ‘a stronger sense of collective ownership’.
All good stuff. This is a worthwhile shot at trying to replicate the member-nominated trustee role (which would simply be unworkable in personal accounts).
But remember if the Government gets its assumptions right there will be seven million people in the personal accounts scheme. And it’s going to be tough call for any members’ panel planning for all their views, and trying to instil a ‘stronger sense of collective ownership’. Especially when a sizeable number would have made no active decision to be part of the scheme, and simply didn’t make the effort to sign the opt-out form.
In a couple of weeks’ time the DWP will be again showing a little more when it publishes its feedback on the White Paper consultation. But I have a feeling we will have to wait until next year, when the delivery authority is truly up and running, before we finally get a picture of what the whole personal accounts scheme will look like.
Rachel Vahey is head of pensions development at Aegon Scottish Equitable.
The views expressed are those of the author and not those of the company she represesnts.IFAonline
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