Scottish Widows comments on the Pensions Bill

Edited by the Insidemoneytalk editorial team Dec 7, 2007

Scottish Widows Pensions Index reveals that 46% of people are not saving the 8% that Personal Accounts will require people to save

Ian Naismith, head of pensions market development at Scottish Widows comments: "Almost half of all workers are currently paying less than the Personal Accounts minimum into pension arrangements.

This means there is a great opportunity to dramatically improve retirement provision in the UK, but only if Personal Accounts are firmly targeted at the target market, and there is no erosion of existing pension provision where contribution rates are generally above the Personal Accounts minimum.

"We believe there are three key factors that the Government needs to consider for Personal Accounts, which have largely been left to be addressed in regulation.

One of the key issues is exemption for employers who have existing schemes in place.

It is critical that exemptions are clear and simple for employers to operate, and in particular must allow straightforward enrolment processes for group personal pensions.

"Another critical issue is that the Government must not subsidise Personal Accounts, directly or indirectly.

If they do then the charges on Personal Accounts could be artificially lower than those of other pension schemes, giving Personal Accounts an unfair advantage.

This would be anti-competitive.

"Finally there is still an issue over how Personal Accounts will be regulated - we need to ensure that there is a level playing field between the regulation of Personal Accounts by The Pensions Regulator and that of existing personal pensions by the FSA.

Otherwise employers might decide to discontinue existing arrangements and enrol staff into Personal Accounts at lower contribution rates simply because that makes life easier for them.

It is clear from our own research that there is still a lot that needs to be done to educate consumers on the need to save for their retirement and we hope that Personal Accounts will help achieve this.".