The government says introducing further pensions reforms in the form of personal accounts with an element of compulsion will result in an additional net £4-5bn in annual savings, equivalent to 0.5% of GDP.
The figure is estimated from the additional savings seen coming from the 10 million people Work and Pensions secretary John Hutton says will benefit from this latest proposed legislation outlined in the White Paper published today - Personal Accounts: A New Way to Save. Personal accounts are seen applying to everyone earning more than £5,000 up to “about £33,500”. Encouraging these additional savings will be a commitment to a long-term cost of 0.3% of funds under management “or even lower”, which Hutton says is between 20%-25% cheaper than an alternative model based simply on competition...
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