Rachel Vahey is head of pensions development at AEGON Scottish Equitable.
How much does your pension cost you? Ask the majority of pension savers that question and the answer will be something like £100 a month.
Most people won't know what the charges for their pension are.
The Secretary of State for Work and Pensions has the job of deciding the charging shape and level for the new personal accounts scheme. This means, if there are no more changes at ministerial level, Yvette Cooper has to make this call, probably in 2010.
It's obviously important pension charges for the personal accounts scheme are set at an appropriate rate for the services members receive.
The role of the Trustee Corporation for personal accounts is to make sure its members are treated fairly but the role of the DWP is to make sure taxpayers are also treated fairly.
The charges debate not only covers the level of charges, but the shape as well. When the Personal Accounts Delivery Authority (PADA) consulted on this last year, it found responses were polarised into two camps. Some respondents thought the charging shape should be a single charge, some thought it should be a dual charge.
But what do the potential personal accounts members think? Are they bothered, as long as the charges are fair?
AEGON carried out some research to test this.
We showed two groups of consumers' information about personal accounts and asked them how likely they were to remain in the scheme. The groups were given identical information apart from charge structures.
One group was told 0.5% of the value of their pension fund would be deducted each year, the other was told charges would be a 5% deduction from contributions, plus a 0.3% deduction from the fund each year.
The results showed the charging structure made no difference to the decision of whether someone would opt out of personal accounts or not. Overall, 26% of people said they would be quite or very likely to opt out. But the main reason they gave was the preference to make their own arrangements for retirement savings.
If the charging structure is not going to affect people's decision to opt out, then this leaves the path clear for the DWP to make this crucial decision based on different criteria.
I believe the long-term sustainability of the personal accounts scheme should be a top priority. We need to safeguard the security of member benefits and minimise taxpayer subsidy.
In these tough economic times, I wonder about the advisability of setting a single charge structure. This would be a highly capital-intensive option.
Instead, the best way to ensure financial sustainability is by matching more closely income from charges with the costs incurred. Only this way, can we be confident of realising the DWP and PADA's aim of meeting the costs for personal accounts in the long term from member charges.
Members don't care about charging shapes. They care that the charges are fair and represent good value for money. In the current climate, people are more risk-averse and want to know their money is safe.
So, the long-term security of the personal accounts scheme should be the cornerstone of this debate.
Otherwise, the risk is if expectations of member take up, persistency, and contributions don't match reality, then the Trustee Corporation will be forced to seek a plan B. That might involve borrowing money, asking for a greater taxpayer subsidy, or even, raising charges.
If personal accounts charges increase, with the subsequent media coverage that they bring, then that will be the moment ordinary people will object to how much their pension costs them.
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