Examination of Witnesses(Questions 1-19)
MR ALAN
PICKERING AND
MR RON
SANDLER
6 NOVEMBER 2002
Chairman
1. Can I open the first evidence session of
the Committee's Future of UK Pensions inquiry. We are delighted
this morning to be joined by Alan Pickering and Ron Sandler, both
very distinguished men in their own right in the industry and
both, of course, authors of seminal works at the invitation of
the Government. We are delighted that they are able to join us
at the beginning of our inquiry. I wonder, gentlemen, if you would
make a short introductory statement? We have got some questions
that we would like to address to you, but if you could just make
some opening remarks?
(Mr Pickering) Chairman, just two points I would like
to make really. First of all, when you told me that you were going
to set up this inquiry, I thought "Oh no, not another inquiry,
not more delay", but when I read your press statement and
saw that your principal aim was to try and build consensus, then
my reaction was "All power to the elbow of you and your Committee"
because pensions cries out for cross-party consensus. The time
horizons here are so great that if people are to commit savings
now for future use, they have to do so with confidence that the
next Government will not dig up the infrastructure. I think we
have a once in a generation opportunity now to build all party
consensus with Andrew Smith, David Willetts and Steve Webb, all
of whom, I think, could actually be transformed from being mere
party politicians into veritable statesmen. David Willetts has
said to me that he will not oppose, in opposition, things which
he would propose were he in Government. I think both he and Steve
Webb have said to Andrew Smith that if he wants to talk about
consensus, then they are willing to respond. You cannot take politics
out of pensions or pensions out politics because they are both
involved with the distribution of scarce resources between conflicting
priorities, but we can, at least, try and take the pensions infrastructure
out of politics and I would hope that you and your Committee will
play your part in saying to the Front Bench spokesmen that consensus—not
consensus at all costs, obviously the Government has to be sensitive
to the proposals which it puts forward, but I would coin a phrase
from Lord Nelson when he said that the boldest policies were the
safest policies. Now, if the Government is bold and radical, then
I would hope that the other party political spokesmen will line
up behind them and say "Yes, we will agree on the infrastructure",
infrastructure in which people can have confidence. Another point
that I would make, if I can, Chairman, is that you are not just
a Pensions Select Committee, but you are the Work and Pensions
Select Committee and I think that it is very important that you
look at those two words as you undertake your report. We cannot
modernise the pension system without modernising the world of
work. Learning should be a lifelong experience. Learning should
not be undertaken at the beginning of our lives and then forgotten
about. The longer we learn, the more we can earn. The more we
can earn, then the greater is the chance that we will be able
to save enough to make sure that we can enjoy retirement rather
than simply endure old age. There are many barriers at the moment
to the employment of older people. We need to dismantle those
barriers if we are to have a sensible pension system. I am not
suggesting that people should carry on doing their 30 or 40 year
job for 40 or 50 years, but if we refer to two professions: take
plumbers and teachers. There comes a time when the physical demands
of plumbing become too great. There comes a time when the stress
of being a teacher becomes too great. My vision is that we will
have a skills exchange in that those teachers who are fed up of
teaching children can teach plumbers. And they can teach plumbers
to teach and those plumbers can then teach teachers to be plumbers,
so that those who have spent most of their life using their brawn
can, in later years, use their brain and vice versa. I
would hope that, in formulating your report, you will stress the
importance not just of modernising the world of pensions, but
modernising the world of work because that is the best way of
diffusing the so-called demographic time bomb.
2. I am very tempted to ask you what you think
a retiring politician could do, but I will not.
(Mr Pickering) I have never met a retiring politician.
3. Thank you. Ron Sandler?
(Mr Sandler) Chairman, I do not have a particular
point to make at this stage, other than I am acquainted obviously
with the terms of reference of this inquiry. It is clear to me
that you are addressing some fairly important issues and I am
delighted to be here to assist your inquiry in any way that I
can.
4. That is helpful. I totally agree. I am struck,
reading the submissions, and you obviously had a wealth of material
suggested to your own inquiries, but they were both quite finely
focussed. I am struck by the extent to which the private sector,
if you like, is in a silo that is almost distinct and separate,
almost a separate box from the kind of State provision, basic
State Pension expertise and the interface between the two silos
seems to be very watertight. If we are to get the kind of holistic
solution which has got, hopefully, some chance of consensus, is
there anything that either of the two of you can suggest to try
and get a bit more osmosis across the interface between the skills
and expertise, on the one side, compared to the other? Because
it seems to me, if you do not get the two systems working more
coherently together, then the chances of getting a structure that
will survive the test of time will be less. Do you have any thoughts
on that? It is just a thought that struck me quite forcibly reading
the submissions that we have got.
(Mr Pickering) If I can kick off on that one. My remit
was to make recommendations about how the DWP private pension
legislation can be modernised, simplified and made more cost effective.
That is why our report was focussed on private pensions rather
than State Pensions. We did deal, however, with the interface
between the public and private pension arena and because the public
system is quite complicated, basic State Pension, SERPS, State
Second Pension. There is a limit to how much impact one can have
by only simplifying the private part of that particular public/private
partnership. So you should not take it as read that because the
report only dealt with private pensions that there are two watertight
skill sets. Those who have views on private pensions have equally
well developed views on State pensions. If you want mine, it is
that by, say, 2030 the State should be promising a universal State
Pension to everyone who is old and not necessarily retired or
poor, that that State pension, by 2030, should be somewhere between
20 and 25 per cent of national average earnings and that between
2020 and 2030 we will gradually increase the age at which people
qualify for that State pension; 65 at 2020, 70 by 2030. So you
will be telling today's 40 odd year olds that yes there will be
a universal State Pension because we have this consensus, but
there will be an opportunity for you individually, collectively
to build on that universal State pension. So it truly will pay
to save. And although the two systems will run in tandem, it is
sensible to keep them separate. Politicians can say when someone
is old enough to qualify for the State old age pension, but when
I choose to retire is nothing to do with you, it is a personal
decision for me on my own or for me in concert with my employer.
As ever, however, the challenge is transporting us from where
we are now to where I think we could build a universal consensus
around what the landscape should look like in 2030.
5. Mr Sandler, your report was quite technically
focussed. Can I tempt you to think more of the big picture?
(Mr Sandler) You can certainly tempt me, whether I
am capable of doing so at this point we will find out. It is worth
perhaps reminding the Committee of the remit of my work, which
was not pensions per se, it was looking at the savings
industry and how that industry works and trying to arrive at a
view as to whether that industry is delivering effective outcomes
for the retail consumer. Clearly, I did not look at pensions policy
and I certainly did not look at public pensions provision. What
I would say, and those of you who have read my review would know,
is that there are number of flaws, I believe, in the way that
private industry operates in the delivery of savings in general
to the retail consumer. I have put forward a number of recommendations
which I believe will have the impact of improving the effectiveness
of the retail savings industry as a provider of savings products.
Clearly, there is a strong interface between the private provision
and public provision, but I do not believe that I am qualified
to comment on how that interface should operate.
6. You did not do any cost benefit analysis
in your work. Was that because you were not invited to do so or
were not encouraged to do so? Do you know if anybody is going
to do a cost benefit analysis on some of the recommendations that
you are suggesting?
(Mr Sandler) I am certainly aware that to the extent
that my recommendations require the FSA to move them forward,
for the FSA to move forward there is a requirement in the Statute
that some form of cost benefit analysis is undertaken. So in respect
of the with profits recommendations or in respect of the Stakeholder
recommendations, clearly the FSA is obligated to perform such
analysis. I think my job was to set up the vision against which
the FSA could begin to move forward, in the expectation and understanding
that the FSA would, in due course, when the proposals were being
fine tuned, do the necessary cost benefit analysis.
7. Can I ask you both two very brief questions
and ask for shortish answers because they are philosophical questions
and we could go on for a long while. There is a lot of talk about
crisis. This word "crisis" keeps coming up in all these
press reports. From your length of experience in the industry,
is the use of the word "crisis" justified or do you
have any thoughts about?
(Mr Pickering) If there is a systemic pensions crisis,
it is a crisis of expectation in that people are expecting the
pension system to deliver more than it can. People do not yet
appreciate that big pensions require big contributions. Obviously,
those who are close to retirement who are affected by the knock
on effect of a 30 or 40 per cent fall in stock market values,
they are themselves facing a personal individual crisis. But I
do not think that the British pension system is in a terminal
decline type crisis. There are, however, unrealistic expectations
out there and we need to make sure that people appreciate that
you only get out of a pension system what you or someone else
puts in. There's nothing technical about that.
(Mr Sandler) If I can respond by addressing the word
"crisis" to savings in general rather than pensions
specifically because that, clearly, is the only way that I am
qualified to offer an opinion. Crisis is clearly a subjective
term and we all may mean different things. Is there scope for
considerable improvement in the way the savings industry operates;
both in terms of the effectiveness of the industry and in terms
of its ability to generate demand for its products? In other words,
encourage people to save more. I would contend that the answer
to that question is yes, there is very considerable scope for
that sort of improvement. Is it a crisis? I will leave others
to judge, but I know that there are many ways in which we can
move very considerably forward in terms of an industry which delivers
better value products to consumers who understand it better and
therefore are more willing to engage with it.
8. Thank you. Finally from me, can you say a
word about your view of the savings gap that everyone is now talking
about? Again, very briefly, if I could ask you to do that. Is
there a savings gap? Some people contradict the notion and think
that it is not a useful concept. Do you have any thoughts to help
us with on that question?
(Mr Sandler) In my judgment, there is a savings gap.
There is a very real level of inadequate savings in this country.
It is a problem which is most acute amongst the less affluent.
Here I am not referring to those who clearly do not have the wherewithal
to save, but I am referring to that group of consumers who have
the means to save more than they presently are saving. They are
defining the consumption/savings balance skewed too much towards
consumption. Part of the problem is the absence of confidence
in the sector to deliver value for money. Part of the problem,
and I think the core of the problem, is simply the economic fundamentals
that the costs of delivering products to the low end saver have
become such that that saver is effectively disenfranchised. Persuasion
to save requires, in the main, a face-to-face process. It requires
some agent to encourage that consumer over the threshold. That
has a cost attached to it, particularly associated with the regulation
of that process. We have in this country, in my judgment, a situation
where the lower end of the market is effectively removed from
the savings process because it is not economic for the industry
to serve them. If you are to change that, the economics have to
be re-engineered.
(Mr Pickering) Just very briefly, a much used word
today is that of "empowerment". There is nothing more
empowering than having some money in a bank account. I think that
we should make it easier for people at lower ends on the income
spectrum to have access to bank accounts and the savings that
then flow through from being able to run one's finances through
a bank account rather than just through one's back pocket. I fight
shy, however, of trying to quantify the savings gap at the collective
national level. It grabs headlines if one says it is 27 billion
or 28 billion. A lot of these big number figures are not only
frightening, but they are predicated on nothing changing. It is
like saying that by 2020 X per cent of the population will be
over pension age. That is only if pension age stays the same as
it is now. So yes, there is a shortfall in people's savings habits.
I would not wish to put a figure on that shortfall however.
Chairman: Thank you. Before I open questioning
to my colleagues, I just note that by its nature an inquiry of
this kind requires us all on this side of the Committee to make
sure that we are clear that we register any potential or rather
additional interests that we may think we have for the advantage
of the inquiry to put it on the record. Just if colleagues think
about that carefully. I now turn to Mr Andrew Dismore.
Mr Dismore
9. Thank you, Chairman. Following on from that,
I have got to declare interest as a victim of Equitable Life,
which I am sure a lot of other people in the room are probably
as well. I would like to start with Mr Pickering and the point
that you made earlier on about the current system being complicated
and your vision of a universal pension further down the track.
Looking at the interface between the State and private, a lot
of people have commented that the State Pension is inadequate,
other people have commented that it is too complicated. But the
Government would come back and say "Well, there is only so
much money we can afford to put into the pension provision and
our objective is to concentrate the help on the people who need
it most" which is when income guarantee comes in and now
Pension Credit. Inevitably, if you are going to try and help the
people who need it most, it is going to create complications,
is it not?
(Mr Pickering) I am not one of those who criticises
either the MIG or Pension Credit, but I see them as being merely
transitional. We should not build a pension system on the premise
that MIG and Pension Credit, in their present form, are going
to be here for the next 20 or 30 years. They create their own
complexity. They create their own wasteful bureaucracy. As I said
before, transitioning is always the difficult task, but in order
to transition effectively one needs a vision of where you want
to end up. And I want to end up, as I said before, with a universal,
non-funded, non-means tested single State Pension of between 20
and 25 per cent of National Average Earnings. If that means that
by happenstance some well off people get more State Pension than
they would under a means tested system, then we have a very acceptable
form of means testing called tax. If people are drawing good incomes
in retirement, then they should be taxed on those good incomes
in retirement.
10. Have you costed what it would take in terms
of extra tax to meet that objective of 20 to 25 per cent?
(Mr Pickering) There are a number of estimates in
the public domain, some produced by the IPPR, some produced by
the Pension Policy Institute. I however would argue that it is
impossible, at this stage, to cost accurately the financial repercussions
in 2030 of my vision of 2030. A lot depends on whether we get
the working part of the "Work and Pensions equation"
working more effectively than it is now. If by simply increasing
the State Pension age we lengthen the period when people claim
unemployment or sick pay, then we have not achieved very much.
I go back to my earlier point that learning and earning should
progress much higher up the age spectrum than they do now.
11. But if you are asking us now to start taking
the decisions that are going to create your vision in 20 or 30
years time, for a Government we really have to know, as best we
can, what the projections are going to be for policy in 20 or
30 years time, because there is no point in us starting to take
the decisions along the lines you have been suggesting just now
if in 20 years time we find that, having taken all those decisions
and the difficulties that come with that, we still cannot afford
what you are proposing, as a nation. And to try to fund the level
you are talking about, even based on today's figures, would be
potentially very expensive if you are talking about a universal
State Pension for everybody at 20 to 25 per cent of Average Earnings
and presumably linked to Average Earnings for inflation after
that as well.
(Mr Pickering) There are not only the statistics in
the public domain to which I have referred. The Government Actuaries
Department is skilled at making these sort of projections. But
all I would counsel you against is the pursuit of spurious accuracy
because you cannot get absolute accuracy as to what the circumstances
will be in 2030. What I would say to you is that it matters little
whether our pension incomes in 2030 come via the public purse
or via the market place. They will ultimately be a drain on the
wealth which the next generation of workers are creating. There
seems to be a myth that by funding pension promises one makes
the delivery of that pension promise easier than if it is paid
for out of taxation. Funding instils a discipline that one might
not get from a pay as you go system, but ultimately whether our
pensioners in 2030 are well off or not will depend on the economic
efficiency of Britain in 2030.
12. I certainly understand you cannot make absolute
projections, but there is also a sort of policy argument which
comes back and which is thrown at us by pensioners all the time,
particularly in the context of Pension Credit, and that is one
of the reasons why Pension Credit is coming in, which is the pensioners
who say "Well, I have saved all my life. I have paid my National
Insurance contributions all my life. The chap down the road has
been swinging the lead all his life and he has got exactly the
same as what I have. That is not fair". If you end up with
the system you are proposing, how would you deal with that argument?
(Mr Pickering) I repeat, I am not criticising the
MIG or Pension Credit in this decade. It is an understandable
reaction to the historic development of pensions in the UK. What
I am suggesting is that we face reality and provide a universal
pension in 2030 which brings people, as of right as citizens,
up to the minimum income guarantee level. Beyond that, it really
will pay to save, not pay to save in a clawback way, but pay to
save in a genuine way. If people save a lot—and I repeat
that you should tax them in retirement—we should make it
as easy and attractive as we can now to encourage people to save
and then those who have over-egged the pudding will be in the
fortunate position to pay tax to help support those who, for whatever
reason, have not. I would make the final point that no matter
what system we have in Britain, we are not going to allow old
people to starve in the street. So you are always going to have
the jealousy between the thrifty and the profligate. I would argue,
however, that if we have a more rational approach to our pension
system, that animosity is much more marginalised than it would
be if we were not to take some bold steps.
13. Perhaps I can turn to Mr Sandler now and
following on one of the things that you developed, Mr Pickering,
that is the question of the complexity of the State Pension system,
which you mentioned and other people have raised with us. Do you
think that that is a significant factor in creating the current
savings gap and if the confusion that we are talking about was
reduced, would that have the counter-effect of encouraging more
people to save?
(Mr Sandler) Again, the question needs to be thought
of both in terms of pensions and savings more broadly. If the
underlying question is; is the complexity that is built into our
saving process and savings system, be that for the form pension
savings or other forms of savings, I would say that yes, complexity
is a very considerable cause of consumer confusion and, as a result,
apathy towards the savings process. We have an industry where
the incentives which drive behaviour within that industry tend
to promote rather than dispel complexity. The sorts of counter-balancing
forces are largely absent in this industry and we have arrived
at the state that we have today whereby the world is extremely
complicated, extremely confusing and, as a result, very daunting
for the average saver. I do believe that if we are able to find
ways to encourage a simpler more straightforward savings process
in which consumers feel more in control or better able to make
comparisons of one provider to another, one product with another,
we will ultimately achieve a greater willingness for consumers
to come forward and save in ways that ultimately are to their
benefit.
14. Yes, I can understand your argument about
transparency, but that does not actually create any more money.
Do you think there is sufficient money floating around that people
would wish to save if that transparency was there?
(Mr Sandler) To a degree, yes. I cannot quantify that,
but there is no question that if you compare savings rates in
this country with elsewhere, or you look at savings rates in the
absolute and look at what has been happening to savings over time,
you are seeing a trend in favour of consumption as opposed to
savings. Clearly savings can only take place at the expense of
some other use of those assets, in this case consumption. To what
extent people are willing to give up elements of that which they
presently consume is an individual judgment, but taken collectively
there is clearly the opportunity in this country to enhance levels
of savings.
15. You mentioned earlier on that some of the
other reasons why people might not be saving, and obviously one
is that they do not have the money, that you made in the first
place, and the other was the lack of confidence, particularly
after Equitable Life that I said earlier on I am a victim of.
But is there not also a case to say that people still think that
the Government is going to look after them in retirement, even
though recent experience and all the campaigns from the pensioners
are arguing to the contrary? And is it not also the case that
a lot of people see other investments—and sometimes they
have no choice about those other investments, such as paying for
houses and the higher house prices we certainly have in London
and the South East—as an alternative form of investment,
one which, in fact, probably produces much better results than
investment through a pension scheme, so that when they come to
retire they can sell up their semi-detached, in my constituency,
and make a significant amount of money to retire somewhere warm
and agreeable?
(Mr Sandler) All of those things are true. There are
a whole range of contributing factors to what let us loosely describe
as inadequate savings levels in this country. Please do not ignore
the economic side of things. The point that I made earlier that
actually there is a large body of consumers in this country for
whom it is uneconomic for the industry to actually target. So
that is one contributing cause. Clearly there are expectations,
most of them rather poorly grounded, in terms of what the State
will provide, which will also have an impact on people's willingness
to make a personal provision. It is also true, if one looks at
the consumer research, that people firstly over-estimate what
the State will provide, they under-estimate what it takes to deliver
a well-resourced retirement and they under-estimate the amount
they have to put away in order to achieve the level that is necessary
to create an adequate level of retirement provision. So there
are all sorts of absences of knowledge there which collectively
add up to people not really addressing the savings problem adequately.
Add to that the scandals that you have alluded to, which clearly
have, to a degree, although I cannot quantify that degree, but
to a degree eroded confidence in the savings industry. There is
the general opacity of the whole savings process and the complexity
of trying to distinguish between one choice and another. All of
that, I think, adds up to the situation that we have today. I
would not wish to try and take each of those factors and ascribe
a weighting to them. I will simply acknowledge that they all contribute
to inadequate levels of savings and it is possible, therefore,
to make improvements in any one of a number of areas.
16. The last question from me. The position
of younger people and trying to encourage younger people to start
saving earlier; is there any sort of magic formula that will do
that? Do you think the existence of means tested benefits is a
disincentive to younger people to save now or is it something
that they simply do not think about?
(Mr Pickering) There is an awful lot of tosh spoken
about the disincentive effect on young people of means testing
pensions. People do not, in their twenties, think "Well,
if I save I am not going to get any benefit from it". We
do, however, need to get young people into the savings habit much
earlier. Not through fancy segments in the National Curriculum.
I am showing my age now, but on my first day of school I took
three shillings to school. 2/6D was for my dinner and sixpence
was to open a Yorkshire Penny Bank account. So from the very first
day I went to school, I was aware that saving money was something
that was culturally acceptable and it did empower me because I
could buy things through saving that I could not buy if I had
not saved. So yes, we want to get young people into the savings
habit. I am not so blinkered a pensions person to say that young
people should necessarily start saving for their pension in their
teens or even in their twenties. There are other savings needs
that are more attractive, more tangible for them. But having got
into the savings habit in those early decades, it will come easier
for them to start paying realistic pension contributions in their
thirties, forties and fifties and even later.
Ms Buck
17. How times have changed. My eight year old
is asking me for a credit card.
(Mr Sandler) I am in no position to comment about
the impact of means testing on the attitudes of younger people.
That is not something that I have looked at or have any experience
of. What my review did look at, however, was standards of financial
literacy in this country and it drew the conclusion that there
is, as in many areas, considerable scope for improvement. One
of the things which I was surprised to see is the low level of
resource which is currently applied towards building standards
of financial literacy, consumer education in financial matters.
It is something which is a statutory requirement of the FSA. At
least "a requirement to promote understanding of the financial
system" I think are the words which are actually written
into the Act. The FSA does indeed recognise that it has that responsibility,
but at present the resources available to that particular effort
are modest in the extreme, partly because the FSA itself is resource
constrained and the resources for education have to compete with
the resources available for consumer protection and the other
elements of the FSA's remit. I have made a recommendation, which
sits within the document, that we really need to embark upon a
much more ambitious and much more focussed process of consumer
education, not just within schools, but beyond, to try and build
a much greater level of literacy and, as a result, confidence
in the financial system amongst consumers. This is not a short
term panacea, but a long term, well thought through, properly
planned process which has clear objectives for which the FSA is
held properly accountable. I think it is something which would
ultimately be of great benefit.
Mr Dismore
18. I am not sure how much the school teachers
would thank you for trying to introduce more into the National
Curriculum. It is bad enough just trying to get decent study in
maths in primary schools, I think. Just following on from that
though, the point I put to you also was the other forms of saving
issue and maybe people are not as illiterate as some would suggest
on the economics of it because, from what I have seen, it certainly
seems as though investment in property, certainly in London and
the South East, has for a long time, even with the ups and downs
of the market, provided a far better return than investment in
even the managed pension funds.
(Mr Sandler) I do not think the equation is quite
as simple as that. I think that to make a statement such as that
and make it a statement of truth in perpetuity, I would be very
cautious of. I think there are certain periods of time in which
certain types of asset prove to be better investments than other
forms of asset, but I think that, in general, there is quite a
body of evidence which talks of the requirement for a balanced
portfolio of assets if they are to deliver the right outcomes
over an entire lifetime of savings. Therefore I do not think it
is adequate to say that we have a thriving property market at
present and therefore we can ignore inculcating within the population
a sense of the need to save. Nor and at the same time can we ignore
any efforts to encourage the industry to become more efficient
and effective in providing savings products. I do not think the
two—one denies the other.
(Mr Pickering) Diversification is the key. One should
not lead a whole generation of baby boomers to believe that they
can solve all their problems by selling their property in the
South East of England. Chances are they will all be selling at
the same time and that will have a depressing effect.
(Mr Sandler) I would also be very nervous about encouraging
an attitude in which we ask of our younger people to purchase
a financial asset on a highly leveraged basis, an asset which
can go up as well as down. We would never suggest that they take
on vast amounts of debt to buy FTSE futures. The notion that somehow
taking on vast amounts of debt to buy an asset which far exceeds
in magnitude the annual level of income of the individual is an
inherently risky thing to do. It may not seem so in the present
environment when property prices have been doing what they have
been doing, but I would put it to you that over a longer horizon
we can offer a slightly more rational and balanced approach to
savings for our coming generations.
Miss Begg
19. Mr Sandler, one of the key recommendations
that you made in your report was the establishment of a suite
of Stakeholder products, including a pension. I wonder if you
can give us your assessment of how successful you think the current
Stakeholder Pension has been in achieving its aims?
(Mr Sandler) I do not think that the success has been
marked in terms of the take up within what I believe was the original
target market group for Stakeholder Pensions. There are, in my
judgment, good reasons for that and they relate to this issue
of economics that I raised earlier in this discussion. It is not
economic to approach a less affluent individual and seek to sell
a Stakeholder Pension with all of the requirements of the selling
process and the regulatory paraphernalia which accompanies that
sales process. What Stakeholder Pensions have, however, been very
successful in doing is introducing a level of price competition
into the industry and injecting a much greater focus than hitherto
on the requirement to be efficient in the manufacture and distribution
of those products. So it is a kind of a mixed score card. I would
also point out, however, that in my recommendation (since you
started the question with reference to my recommendations) I used
the term "stakeholder" to characterise a generic suite
of products which are substantively different from existing Stakeholder
Pensions. They are different in the sense that what I am proposing
and what I believe the Government is enthusiastically pursuing,
although time will tell whether that belief is well founded, is
a suite of products which are regulated and regulated quite tightly
across a number of dimensions, including the investment profile
of those products; something, for example, which Stakeholder Pensions
is not subject to. By regulating the product, it is possible to
create a degree of safety within those products to allow them
to be sold outside of the regulated sales and advice regime. And
that is my solution to the re-engineering of the economics to
allow a suite of products to be made available to people who presently
are not being served by the savings industry.
|
