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.
- 2 Disney heiress Abigail disowns her share of family profits in West Bank company
- 3 The secret report that helps Israel hide facts
- 4 'Women should not laugh in public,' says Turkey's Deputy Prime Minister in morality speech
- 5 Israel's propaganda machine is finally starting to misfire
The secret report that helps Israel hide facts
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
A day in the life of Vladimir Putin: The dictator in his labyrinth
Putin is 'thuggish, dishonest and reckless', says British ambassador to US
Richard Dawkins tweets: 'Date rape is bad, stranger rape is worse'
Boozy, ignorant, intolerant, but very polite – Britain as others see us
- < Previous
- Next >
iJobs Money & Business
£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...
£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...
£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...
£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...
Day In a Page
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
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