Warning of new pensions disaster

THE Government was yesterday warned it would trigger a fresh pensions mis-selling disaster if it brought in a new vehicle without wholesale reform.

In a centre-piece of its plans for welfare reform, the Government is pledged to introduce "stakeholder pensions", a new tax-exempt pension plan aimed at bringing pensions to 8 million people who have no retirement savings.

But leading actuaries Bacon & Woodrow said stakeholder pensions would open the way for a repeat of the pounds 12bn mis-selling scandal unless they were accompanied by fundamental reforms.

Speaking at the annual conference of the National Association of Pension Funds, Andrew Warwick-Thompson, B&W pensions expert, said: "We would implore [the Government], please don't introduce another pension regime on top of those we already have. If you push stakeholder pensions into the market as it stands at the moment there will be mis-selling."

The actuaries fear the Government's reforms will simply introduce another pension regime alongside the already complex rules for retirement saving, echoing the introduction of personal pensions in 1998.

This would open the way for unscrupulous salespeople to switch unwary savers into inferior schemes, just as they did in the case of personal pensions.

Pension funds have become concerned that stakeholder pensions will have to offer low charges and good value if they are to appeal to low-income savers. This would prompt savers to shift into stakeholder pensions and away from employer-sponsored schemes.

Pension funds, which control over pounds 600bn and own over a third of equity on the stock market, already feel battered by Government reforms which have taken more than pounds 5bn a year from their investment income.

The July Budget decision to axe the tax credit on dividends has prompted many funds to sell equities, which no longer offer such clear tax advantages, and buy Government gilts. Fund managers predict pension funds will increasingly shift into corporate debt.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific