Information: For immediate release Tuesday 13 April 1999

STAKEHOLDER PENSIONS - AUTIF RESPONSE

A copy of this Association’s response to the two Government Consultation Papers connected with Stakeholder Pensions is attached. The main points that we make are as follows:

• The initiative set out in the Treasury/DSS Consultation Paper "Helping to Deliver Stakeholder Pensions" to introduce a Personal Pensions Investment (PPI) will not add complexity to the current pensions scene so far as members of the public are concerned, but it will enhance the ability of managers of authorised investment schemes to offer low cost personal pensions. Unless the proposal is enacted swiftly, managers of open-ended investment companies and unit trusts will be debarred from the personal pensions market. It is therefore vital that the Government takes the limited action required to introduce the PPI as soon as is possible, certainly before the end of this year.
  
  
• We also believe that the PPI concept would have the potential to form the basis for an extremely attractive new form of pension which could not only be held individually but also be transferred to an occupational defined contribution scheme if, for example, an individual moved from being self-employed to employed (and vice versa). We believe that this proposal should be considered on the same timetable as that for stakeholder pensions.
  
  
• On stakeholder pensions themselves, whilst welcoming the Government’s objectives, we believe that the proposals thus far are insufficiently radical to achieve those objectives. In particular the introduction of a new form of pension without working through its relationship to current pensions will create huge regulatory difficulties, even though many aspects of the stakeholder pension are to be welcomed . We believe that the Government should either extend more broadly the principle of contribution limits being set without regard to earnings, or the contribution limit for stakeholder pensions should be set lower, but not taken into account at all in other pension contribution calculations.
  
  
• The paper notes that we remain to be convinced of the need for further trustee involvement in stakeholder pensions based on the PPI where there is already a statutory requirement for an independent trustee with defined powers and responsibilities.
  
  
• Finally, we believe that however simple the eventual pensions landscape becomes for the majority of people, there will still be a significant demand for advice on pensions matters. We therefore believe it is vital that in thinking about the level of charges which will be acceptable for pensions for the majority of the population, the Government pays regard to this legitimate demand for advice and the costs associated with it.

For further information please contact:

Philip Warland, Director General, AUTIF, 0171 831 0898
Anne McMeehan, Director of Communications, AUTIF, 0171 831 0898
Clare Arber, PR Manager, AUTIF, 0171 831 0898