personal accounts

The Government's plans for the structure of personal accounts announced today has received a mixed reactions from industry bodies and firms.

The Government today promises personal accounts will "complement rather than compete" with existing pension provision.

Saving into personal accounts could generate poor returns in retirement for vulnerable groups, including many women, according to research commissioned by the Equal Opportunities Commission (EOC) and conducted by the Pensions Policy Institute (PPI).

The Director General of the ABI, Stephen Haddrill, has called on the Government to raise the initial rate of employer contributions to Personal Accounts, from 1% in the first year to 3%.

A £3,000 contribution cap on personal accounts would be sufficient for most low earners - including the self-employed - to achieve a replacement rate in retirement of two-thirds of their final salary.

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.

Ministers are being urged to clarify the Government's current thinking on the advice regime that will accompany personal accounts.

An amendment made to the Pensions Bill by Baroness Hollis, ahead of its first debate in the House of Lords, could help ease the impact of means-testing on personal accounts, says Standard Life.

Personal accounts could lead to "pensions apartheid" as entry into good existing occupational schemes is restricted by employers following the introduction of auto-enrolment, claims the Association of Consulting Actuaries.

John Hutton, Secretary of State for Work and Pensions, has revealed personal accounts will be run by trustees who will take "ultimate responsibility" for the "strategic direction" of the scheme including choosing funds and collecting contributions.