Sam Dunn: The hard road to 'soft compulsion' on saving
Will companies reduce their own pension provision?
Sunday 10 December 2006
The direction of the proposed new national pensions savings scheme (NPSS) is expected to become clearer this week.
On Tuesday, a White Paper on "personal accounts" - individual pension pots into which all workers are enrolled when joining a company unless they opt out - is to be delivered. Its details should give some idea of what the scheme will look like, as the industry gears up for its arrival in 2012.
Since being unveiled by Lord Turner last year, plans for a "soft compul- sion" private pension scheme - every employee pays in 4 per cent, the company 3 per cent, the Government 1 per cent - have sparked plenty of rows.
These have mainly centred on the scheme's perceived risks, as well as who should run it, and how. Among the concerns - expressed by the National Association of Pension Funds last week - is that the 3 per cent contribution from employers will end up encouraging companies to scale down their overall private pension provision.
After all, if the statutory minimum is 3 per cent, why offer much above it for the company's own pension?
Warnings over the impact of means-testing have also been raised by pensions specialists, including Ros Altmann (the former Downing Street pensions adviser), Tom McPhail (of independent financial adviser Hargreaves Lansdown) and Steve Bee (head of pensions strategy at asset manager Scottish Life).
Their fear is that low-income workers who qualify for means-testing could end up worse off by contributing to the NPSS. If they put aside thousands of pounds over a working lifetime only to find their final payout is smaller than their pension credit support from the state would otherwise have been, it makes no sense.
The spectre of mis-selling claims could then arise, since a government policy that says you'll be better off and ends up actually slashing your final entitlement could be challenged - possibly in court.
There are also concerns over whether firms will offer incentives to workers not to take part in the NPSS - higher salaries, perhaps - and so reduce their own pensions liability.
Elsewhere, insurers desperate for a part in running the NPSS money have busied themselves emphasising their experience and pension expertise.
Against them, retail fund managers - more nimble and less tainted by chequered track records in pension management - are itching to have a go.
I hope the Government has done its homework; if the Chancellor's pension plans in the pre-Budget report are anything to go by, we're in for a long, bumpy ride.
Diving in at the deep end is no excuse for shirking the style stakes
Consumers given power to choose a green deal
Mark Dampier: A safe harbour if the market recovery has overreached itself
'Scrap the trap': calls for change grow as banks are told to play fair with loyal savers
Bargain Hunter: Eurostar offers child fares for £1 each way to Paris, Brussels and Lille
Relaxed pensions rules: Guide to what they mean to you
- 2 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
£40000 per annum: Harrington Starr: Network Engineer (CCNA, CCNP, Linux, OSPF,...
Day In a Page
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square