Written Evidence to be reported to the House
Pensions Bill
12:00 pm
Joanne Segars: We do. We agree with the ABI and, I think, with the Investment Management Association,that the preferred solution would be to sort this problem out through a change in European legislation. In the absence of that, we take a different view from the ABI. Our preferred solution is that auto-enrolment should, as nearly as possible, apply to group personal pensions and workplace personal pensions. We do not believe there should be an exemption for workplace personal pensions—we believe that that would undermine the principle of auto-enrolment that is at the heart of these reforms, and on which the success of personal accounts really depends. It would create an uneven regulatory and cost playing field between occupational pensions—whether defined-benefit or defined-contribution pensions—and workplace personal pensions. The cost of auto-enrolment to occupational pension schemes is between £1 billion and £2 billion a year.
We are also slightly unclear as to how some of the solutions around streamlined joining—which, as I understand it, is by no means universally applied by the insurance companies—would work in practice combined with targets. We believe a better solution lies in requiring employers to auto-enrol in workplace personal pensions through a system of master trusts. We believe that that is feasible, affordable and workable.