A year older and not an hour richer

As the festive season is now in full swing, you would have thought we could have begun to wind down – just a tad! Not so. In recent days we’ve seen a flurry of activity, including the Pensions Bill, introducing personal accounts, a consultation allowing SIPPS to hold protected rights and the Government succumbing to pressure to improve the Financial Assistance Scheme benefits.

It looks as though 2008 may be even busier than 2007. We’ve got loads to keep us busy. To start off  the Pensions Bill will be travelling through parliament in the earlier half of the year; I wonder if this will get any lords-a-leaping!
Running alongside this will be a consultation on personal accounts charges. And I hope we will find out that GPPS fully meet the qualifying scheme test by adopting techniques such as streamline joining.

The regulators will also have their work cut out. The FSA will be giving feedback on the Retail Distribution Review indicating where this is going next. And towards the end of the year all insurance companies and financial advisers will have to have hard evidence they are treating their customers fairly. While the Pensions Regulator is expected to issue a series of good practice guides, including one looking at the role of employers in GPPS.

So what does this all mean to us? We’re all older, and unlike Ebenezer Scrooge, hopefully a little richer, but are we any wiser? 

Kate Smith
Pension Development Consultant

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More questions than answers

13 December 2007

Life is sometimes deceiving. At first glance a Pensions Bill of just shy of 100 pages seems like a breeze. Ploughing through the 100 or so clauses takes you a little further down the road to enlightenment, but in usual style it raises more questions than answers.

It sets out in legislation the contribution rates to personal accounts and the band earnings these will be based on (£5,035 to £33,540). But it fails to confirm or deny whether the contribution limit will be £3,600. There is also a clause suggesting that further payments will be allowed on top of the contribution limit – but we don’t know the circumstances of these. Are they additional lump sums or a higher limit of £10,000 in the first year? Or something else entirely?

We know employers will be penalised heavily for non-compliance with fines of up to £50,000, escalating up to an additional £10,000 a day. But we are still a bit stuck about how the Pensions Regulator will find the time, money and people to monitor this.

And the Bill also confirms employers don’t have to contribute to personal accounts as long as they have a qualifying pension scheme and that could be a GPP. But what is missing is the exact terms of enrolment these schemes will need to meet.

The Bill takes us one step further towards pensions reform. But it doesn’t give us the full picture. We need to keep on working with the Government to get that.

Rachel Vahey
Head of Pensions Development

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Important note

This blog provides the views of our industry lobbying team. The views are the opinion of the person writing the entry of the blog and don't necessarily represent the views of AEGON in the UK. They are based on their interpretation of industry developments and their current understanding of UK proposed and actual legislation, and should not be interpreted as recommendations or advice.