Schedule 1 sets out how the Personal Accounts Board will operate. I believe that in setting up personal accounts, we move into uncharted waters. This is not an employees’ occupational pension scheme through which, as the hon. Member for Eastbourne mentioned, a shortfall in the scheme can be met by increased employer contributions. We have little information. We can make estimates about take-up, and we have had extremely involved discussions about contribution levels and how people with varying income levels can access the scheme. However, we do not know how things will work out.
The hon. Gentleman assessed some of the issues, such as the charging structure. I welcome the fact that PADA has started a consultation on that. I believe, as AEGON said, that it is important to have flexibility within the charging structure that is adopted, because it is important that personal accounts are self-financing. I do not want to see a situation whereby, because of the nature of what has been set up, a large Government subsidy is required in future. That would go totally against the spirit of the Bill. Equally, we do not know what the future holds, and the ability to report and present actuarial evidence of how the Personal Accounts Board is operating is important.
We talked earlier about the need for transparency in what we are doing. Personal accounts will involve an awful lot of people who currently do not have access to a pension scheme. We need, therefore, an ongoing mechanism to ensure that as the scheme cranks up, there are regular reporting points on how it is progressing. Amendment No. 65 is important because it would require a report on the financial position that would include evidence of take-up, persistency and levels of contributions to the scheme, and a measurement of that against the running costs of the scheme. We know that in the initial years the costs will be much higher than what will be recouped by the contributions, whatever type of management charge is introduced. It is therefore important that there is a mechanism to ensure that such ongoing discussion takes place.
The financial models that are used by PADA and the Personal Accounts Board must be made available. We must know the assumptions on which the board is operating. Obviously, PADA will be doing a lot of work on this in the next few years and it is important that that information is made available and is up front. That is the best way to ensure that personal accounts get off to being the success that we all want to them to be and that there is flexibility in the system, so that if changes occur that were not predicted at the beginning—I cannot believe that it is possible to predict all the changes—they are reported and prompt action is taken. The worst scenario would be for the organisation to continue on its own as an arm’s length organisation believing that it is doing its best and that it can sort out a problem in the long term, yet meanwhile storing up huge debts that will saddle future members with increased costs. It is important that we have a model from the word go that ensures that costs are recoverable within a time frame that does not mean that future members will be saddled with costs for which they receive no benefit.