ABI: Government is failing to meet its promises on personal accounts

ABI: Government is failing to meet its promises on personal accounts

ABI: Government is failing to meet its promises on personal accounts

In a speech to the Institute of Economic Affairs’ conference on the Future of Life Assurance, Stephen Haddrill, Director General of the Association of British Insurers, will today warn that unless the Government ensures that Personal Accounts complement, rather than compete with, existing pension provision, its whole programme of pension reform will fail.

Mr Haddrill told the conference:

“Throughout the debate on the NPSS, the Government has made one thing clear. From the top down, it has said again and again that the new Personal Accounts must complement and not compete with existing pension provision.

“The problem is that the Government is failing to live up to that promise.

“It is no good just saying the right thing; from now on, the Government must do the right thing as well.

“The Pensions Minister told us at our ABI Conference last week that he wants to see auto-enrolment into all work-based private pensions. But the EU’s Distance Market Directive prohibits pure auto-enrolment into work-based Group Personal Pensions. This was a predictable issue, and one which the Government has only belatedly started to address. To its credit, though, it has now started to engage constructively with us – it is crucial that this work results in Government support for definitive workable proposals. Otherwise, it risks being accused of misleading savers. If those proposals fall short, unfair discrimination will be created between the different forms of work-based savings. Automatic enrolment should not go ahead if it meant the creation of a two-tier workplace pensions structure.

“The Government must re-focus this policy on its target market of low and middle income employees and pull back from its plans to expand into existing pension savings. And it must re-test its proposals against the benchmark of unfair competition.

“If it fails to do either, it will find itself with a compromised system of low value Personal Accounts and a full-scale assault on existing good pension provision. And it will have wasted the goodwill and support that still exists for the idea of expanding saving and increasing the number of savers.”