Pensions Bill
11:45 am
Paul Myners: We spent some time with the Work and Pensions Committee on this issue and on striking the right balance between offering sufficient choice and so much choice that it confuses. All the evidence suggests that a high percentage of employees will opt for the default fund. Private sector experience here and the experience of similar arrangements elsewhere—in Australia, Sweden and Denmark—is that the default option proves to be the one that most people choose. Therefore, we will have to do a great deal of work around the design and articulation of the features of the default option. Around that, we will create a range of funds that gives sufficient, but not excessive, choice. Then, through the process of consultation with the member panels and the employer panels, we will test prospective new products. To some extent, I think it is refreshing that the product range is one of the things that will work to sustain interest in, and awareness of, the work of personal accounts. However, we will always do that against the test that it should be self-financing, and that we should not get cross-subsidisation from one customer to another as far as product cost alone is concerned, as opposed to the total cost of the scheme.