For immediate release: Thursday 16 June 2005

IMA CALLS FOR PUBLIC/PRIVATE PENSION PARTNERSHIP
Richard Saunders� speech to the IMA Conference, 16 June 2005

Speaking at the IMA conference this morning, Richard Saunders, Chief Executive said:

�In the future world, pensions will be a form of saving, not a form of insurance which has been the case to-date. In future there should be no need for pensions to be wrapped in life insurance vehicles. They just need to be simple, clear and transparent. The A Day reforms will go a long way towards dealing with this.

And what that points to is a crucial role for funds in the pensions provision of the future.�

Addressing the challenge set by Adair Turner to the industry to develop proposals for significantly reducing the cost of investing, in particular by working out how to reduce the cost of administration and distribution Mr Saunders continued: 

�It is for Government to provide a tax and benefits system which makes the appropriate redistribution while ensuring that there are suitable incentives and no distortions. But there are those things which the industry is good at and which it needs to be allowed to do. Principally investing assets and product design.�

�The key pointer to moving forward is the idea of a public/private partnership.    This has become commonplace in other areas of Government, but has not so far reached state pensions. Within the public sector we have the Contributions Agency which exists to collect National Insurance Contributions. With its unique identifier in the shape of the National Insurance number, it is well placed to take the burden away from the industry of keeping track of individuals.

At the other end of the chain, funds provide the perfect investment vehicle. They are transparent and � critically � afford the best investor protection because of the independent trustee or depositary. The question therefore is what sits between the two and runs the scheme. In many ways it looks like a fund supermarket.

Costs need to be considered but let me say loud and clear today that if price caps are imposed any such scheme will not work.   

There is more work to do, but IMA will press forward with ideas. Some of our early estimates suggest that a scheme of this sort could result in new flows for the industry of �10bn a year. There would be very real benefits for all in such a public/private partnership, but most important of all for people working towards a comfortable retirement.�

A full copy of Richard Saunders� speech is attached.

-Ends-

For further information, please contact:
Helen Stephenson, Communications Officer, IMA, 020 7831 0898

Out of hours contact:
Mona Patel, Head of Communications, IMA    07834 089332