Select Committee on Work and Pensions Fourth Report


2  PERSONAL ACCOUNTS

48. The Pensions Commission recommended reforms to the state pension system "to make it more understandable and less means-tested" and thereby improve the effectiveness of voluntary private pension saving. However, it did not think that this would in itself "remove barriers to adequate private pension provision."[59] It therefore recommended the introduction of a new National Pension Savings Scheme. The White Paper adopts this proposal, referring to it as a "new low-cost scheme of personal accounts."[60] The key objectives of the scheme are to: [61]

  • Overcome inertia and greatly increase participation in pension savings by means of auto-enrolment of employees and modest compulsory matching contributions by employers;
  • Aim for a 'base load' of earnings replacement through minimum contributions of 8% of a band of earnings.
  • Encourage the maintenance of existing high quality pension provision by allowing employers already providing more generous provision to auto-enrol employees into those arrangements.
  • Ensure the low cost of operations (e.g. an Annual Management Charge of 0.3% per year or less) by using a national payment collection system and providing members with the option of investment in very low cost funds bulk bought from the fund management industry.

49. As proposed by the Commission, eligible employees would be automatically enrolled into the scheme but would be able to opt out. [62] They will contribute 8% of a band of earnings of between around £5,000 and £33,000 a year. 4% will come from the employee, 3% in the form of a compulsory contribution from the employer and a further 1% from Government in the form of normal tax relief.[63] The Government intends to bring forward "proposals on the approach to administration in personal accounts later this year."[64]

Participation in the scheme

50. The Commission considered that most people at lower earnings levels - below about £8,000 - would rely primarily or entirely on state provision in retirement. For them, the state would "ensure earnings replacement rates of over 80%."[65] For median earners (around £23,000), the Commission considered it a "reasonable aim of public policy" that they achieve a replacement rate of at least 45%. 30% would be provided by the state pension (Basic State Pension and State Second Pension) and 15% from participation in the new system of personal accounts, from about age 30.[66] The Pensions Policy Institute commented that this 15% "sets a very high standard" for the scheme.[67]

51. In the White Paper, the Government accepts the Commission's analysis that a minimum contribution of 8% of the proposed band of earnings is capable of delivering, with the state pension, "a replacement rate of around 45% of earnings for a median earner with a full working life." It emphasises, however, that this should not be taken "as implying certainty about replacement rate outcomes." "Actual replacement rates can vary substantially" depending on a range of factors such as earnings, the age at which saving starts, investment returns and annuity choices.[68]

52. The White Paper does underline, however, the importance of the scheme as part of its package of pension reform proposals. A median earner who does not save would be less well off in retirement in 2053 than if current policies continued.[69] A median earner who does save, on the other hand, should be better off in retirement.

53. The success of the new system of personal accounts will be critical to encouraging saving and delivering 'adequate' retirement incomes in the future for those on median earnings. This will need careful monitoring.

The decision to opt out

54. The White Paper explained that "conventional economics suggests people will try to smooth their spending over their lifetime", for example, choosing to borrow when they are younger to fund education or buy a house and starting to save when they are older. It noted, however that "actual spending tends to track income more closely than these theories would suggest." An explanation is offered by behavioural economics, which identifies a number of reasons why people do not save for retirement, even when it is in their interest to do so - due to procrastination and inertia.[70] It was to address this problem that the Pensions Commission recommended automatically enrolling people into a pension savings scheme.[71] It considered 'auto-enrolment' preferable to compulsion because it left individuals free to make decisions "in the light of their preferences and circumstances."[72] They could choose to opt out if participation was not in their interests because, for example, they were going to inherit significant housing assets, or if they had high interest rate debt outstanding.[73]

55. Some witnesses expressed doubt about the extent to which undersaving was due to inertia. Deborah Cooper, of the Actuarial Profession, suggested that some people would be better advised to pay off debt, or save money in a form where they can access it:[74]

    "if something unforeseeable happened - your roof caves in or whatever - if all your savings are in a pension you do have to borrow in order to get that right and over your life cycle that can make you worse off. Sure, retirement saving makes you better off in retirement, but only at a cost during your working lifetime […] The impression that comes away from not just the Pensions Commission but a lot of economic research is that people behave irrationally by not saving, but I think often we underestimate them […] I think often people are making quite rational decisions by not saving, particularly low-income families with children."

56. Alison O'Connell of the Pensions Policy Institute argued that for these people, "auto-enrolment does not help, it just makes the decision more acute".[75] They can opt out, but by doing this may risk inadequate retirement incomes (see para 50). It is difficult to know how many people this would apply to. The Secretary of State said he had not seen a breakdown of reasons "why people do not save into specifically hard and fast areas."[76]

57. An individual's decision to participate in the scheme or to opt out, therefore, has ramifications for their income in working life and in retirement. This raises the question as to whether people need advice to help them make the right decision. In evidence to the Treasury Committee, Lord Turner argued that people were already making these decisions without individual advice in the occupational pension scheme environment.[77] In the context of personal accounts, he said:[78]

    "We believe that the generic advice to people, categories of advice in the literature through citizens' advice bureaux, which says, "For the vast majority of people this savings scheme will make sense. If, however, you are a high APR credit card debtor you should consider not joining", is something which we believe people are capable of doing without individual advice."

58. Teresa Perchard of Citizens Advice, however, argued that the decision could be more complicated than this suggests:[79]

    "This is actually quite a complicated concept; what it is, just the rate of interest you are paying, or the amount of debt you have got relative to your income, whether it is secured or not, what other assets you have got, whether you have got some insurance against the risk of not paying those debts."

59. She argued that some people would need face-to-face advice from someone able to look at all their financial circumstances and help them make an informed decision:[80]

    "It is not quite as simple as just putting out a leaflet saying, 'If you have this amount of interest that you are paying on any credit card, or loan, you should not take this out at the present time' […] It might well be, for students, if their only debts were those that had been accrued through the student loan system, that the interest payable by them on their debt was far outweighed by the benefit of being within a National Pension Savings Scheme."

60. The Resolution Foundation argued that the model proposed for the personal accounts system would still leave people with "complex and important decisions to make about their pensions".[81] It identified a range of circumstances where people would benefit from advice:[82]

  • "People at the lower end of the income scale for whom means-testing would act as a disincentive;[83]
  • When deciding whether to contribute more than the minimum (see para 84);[84]
  • On retirement (for example, as to the type of annuity to purchase);[85]
  • Self-employed people - who may need advice as to whether their business will provide security for retirement;[86]
  • Those working for small employers who may prefer to reach an informal agreement, for example, accepting a cash payment in lieu of the employer contribution.[87]

61. In evidence to the Treasury Select Committee, the Financial Services Authority acknowledged "the centrality of removing the requirement for individual suitability advice, and therefore regulation of such advice" from the personal accounts scheme.[88] However, Which?, Citizens Advice and the Resolution Foundation argued that generic financial advice was needed.[89] Teresa Perchard of Citizens Advice explained the difference:[90]

    "In the debate about pensions, people talk about advice but they are talking about advice in order to make the sale, or a pension product, not advice in the round, about you, your money, your future prospects, your family, how to manage that money effectively and then keeping that under review. I think that is where we need to shift to, to look at advice in the round for individuals, which also helps people to deal with concepts and choices more effectively than they have done in the past."

62. Generic advice is information, advice and guidance that does not involve recommending a course of action in relation to a specific provider's product. It is defined by the Financial Services Authority as "Services and tools that use information about individuals' circumstances to help them to identify and understand their financial needs and to plan their finances."[91] The Treasury Committee is considering these issues in the context of its current inquiry into financial inclusion.[92]

63. We were surprised to learn from Lord Turner that he had not discussed his proposals with the Financial Services Authority,[93] in particular in the light of the history of mis-selling charges in the pensions sector. It is important to minimise the risk of mis-selling obligations against the Government encouraging saving among those who would be better advised to opt out.

64. The target group for the new system of personal accounts includes those on low to median incomes, many of whom do not currently have access to financial advice. For some people deciding to save for a pension will involve complex decisions regarding, for example, how to deal with existing financial commitments. Generic financial advice would assist people in doing this effectively (see para 453).

Will people be better off by saving?

65. Also linked to the decision whether or not to opt out is the issue of means-testing. The combination of the compulsory employer contribution and the projected reduction in means-testing as a result of the state pension reforms is designed to make the decision to participate straightforward for most - they could be fairly confident that they would be better off in retirement as a result.[94] This is of particular importance because it will be Government policy to auto-enrol them - and thereby give them a strong steer towards participation.

66. The Secretary of State spoke of the importance of "being absolutely sure that it will be safe automatically to enrol people in it [the personal accounts scheme], so that they will always be better off inside it than remaining outside it and relying on means-tested support from the State."[95]

67. Those at risk of being no better off despite having saved are those who end up eligible for Guarantee Credit in retirement.[96] Some 6% of pensioner households are expected to be eligible for Guarantee Credit only in 2050.[97] The Government acknowledges, however, that there is an element of uncertainty in such long-term projections (see para 287). As we note in paragraph 293, it would be useful, to aid individual decision-making, for DWP to provide details of the types of individuals who might expect to be eligible for Guarantee Credit in the future, for whom generic advice will be appropriate.

PARTICIPATION RATES

68. The Government estimates that "a fully rolled-out personal accounts scheme would have between 6 and 10 million members at any time, with a central estimate of 8 million members out of a total working-age population of 37.1 million."[98] The Government estimates that opt-out rates will be between 20% and 50%, with a central estimate of 30%.[99] The Secretary of State made it clear that such estimates came with "something of a health warning attached to them. It is immensely difficult to be absolutely precise about prophesying future behaviour."[100] The Department assumes that opt-out rates will be higher than those in existing occupational pension schemes with auto-enrolment and an employer contribution because the "group targeted includes many who are less likely to save." [101]

69. The Department's analysis indicates that those likely to opt out include:

  • people aged under 25;
  • those who do 'not believe in saving', and
  • those reported to be struggling with debt; and after that:
  • people aged over 55;
  • with children under 10, and
  • the self employed. [102]

70. The Pensions Commission report considered that opt-out rates were likely to be higher for those on lower earnings (e.g. 35% for those with earnings between around £5,500 and £12,500; and 20% for those with earnings over £12,500). [103]

71. High rates of opt-out would be a cause for concern because those opting out would be at risk of inadequate incomes in retirement. On the other hand, it is possible that participation rates might be higher than DWP's estimates expect. In this case, the new system would need to be able to manage the higher than expected workload. The Secretary of State told the Committee that it was possible that there would be targets for up-take of personal accounts by different groups:[104]

    "Whether they would be a PSA type target has not been resolved. I think it is very likely that it would be necessary I think in relation to setting up NPSS or anything like it that there are some milestones or operational objectives set up for the provider delivering that service, and I imagine that would be at least governed in part by contractual processes."

72. In response to this report, the Department should outline its strategy for maximising participation in the new system of personal accounts, explain what targets it intends to set for participation in personal accounts, identify a level of participation below which it will review the policy of auto-enrolment and consider whether people should be compelled to participate, and outline contingency plans for coping with the work-load if participation is higher than expected.

Who is in the target group for the scheme?

73. Lord Turner described the target group as those earning around £10,000 to £30,000 a year who are increasingly not making any provision on top of the state pension: "That is the core problem that we are trying to fix."[105] The Commission's analysis suggested that those currently unlikely to be contributing to a pension included: many self-employed people; many employees in small firms; and employees in particular sectors such as the retail sector. Women have in the past accrued on average significantly less occupational pension than men and there are also significant differences by ethnic group.[106]

Employees in small and micro businesses

74. The Pensions Commission found that only around 30% of employees in firms with fewer than 50 employees participated in an employer-sponsored pension scheme.[107] The White Paper found that of nearly one million (980,000) employers in the private sector who offer no pension provision and/or make no contribution, two-thirds (650,000) have fewer than five staff and just under a third (310,000) have 5 to 49 staff.[108]

75. The success of the personal accounts scheme will be of critical importance for their employees. The Commission warned that "moderate income earners, particularly those employed by small and medium-sized employers, would be worse off" if the personal accounts scheme were not a success, "as over time they would not have any element of earnings-related pension provision.[109] It identified employees in micro-businesses as a "key group of undersavers".[110]

76. Because of the low levels of pension provision by small employers, the Pensions Commission conducted focus groups to look at how they would respond to reform proposals. Participants from micro-businesses (with fewer than five employees) were "profoundly concerned" by the prospect of an increased obligation to "provide, administer or contribute to employee's pensions."[111] The research found that reform options which imposed additional costs would "not only be highly unpopular, but also likely to have a range of negative effects on SMEs [Small and Medium Sized Enterprises]". Some participants "suggested that they would revise their growth aspirations, and some claimed that they might seek to avoid meeting new obligations - a strategy that could result in distortions to the labour market".[112] DWP research with micro-employers found that participants felt little, if any, responsibility for their staff's pensions and usually believed that their staff would prefer higher wages over pension contributions. Compulsion for micro-employers was rejected "because they did not feel that they had a responsibility in this area, and because they felt the extra costs would be too much of a burden on their business." [113]

77. In evidence to the Committee, Mike Cherry of the Federation of Small Businesses said of the compulsory employer contribution:[114]

    "This is going to be yet another burden which, quite honestly, could be the straw that breaks the camel's back. 3% does not sound an awful lot, obviously, but I can assure you, where it is a break-even line already, it could be the bit that just tips the business over."

78. A survey from the Association of Consulting Actuaries found that "firms expect opt-out rates to be quite high…with the incidence of opt-outs at this level rising to over 60% among the smallest firms."[115]

79. Small employers are more likely than large ones to offer no pension provision and there is concern among this group at the prospect of being obliged to administer and contribute to employees' pensions. The Government should outline its strategy for maximising participation among employees in small businesses.

Self-employed

80. The Pensions Commission said that a "disproportionate percentage of the self-employed appeared in danger of inadequate pension income in retirement." This reflected the fact that they cannot be members of the State Second Pension and only 38% had private pensions compared to 56% of employees.[116] The Federation of Small Businesses was concerned that many of the issues facing the self-employed had been overlooked in the current debate.[117]

81. The White Paper stated that the "self-employed make up a key segment of our target group". However, while it recognised that "participation rates for personal accounts could be affected if the self-employed are not able to join the scheme easily", after detailed consideration it concluded that there was no way of providing an automatic enrolment process for this group.[118]

82. The White Paper does not provide the self-employed either with access to the State Second Pension or with an automatic enrolment process to the personal accounts system. This will make a strategy to maximise participation in personal accounts by this group critical.

Those not in paid work

83. The White Paper proposes allowing those not in paid work to contribute to personal accounts.[119] It estimates that if around 5% of those who are unemployed, economically inactive or earning below the income threshold (about £5,000) chose to participate, this would give between 0.3 million and 0.9 million members.[120] The Department has not, however, adopted a suggestion made by the Equal Opportunities Commission that additional contributions should be made for groups such as carers: "The tax relief system, which costs the Government up to £21 billion each year, still gives far greater benefits to higher rate tax payers. We would like to see greater redistribution, with the Government giving greatest support to those least able to save more."[121] Lord Turner said that he did not think Government contributions on behalf of such groups should necessarily be excluded, although it should be "real, up-front money, ie, this must be a funded scheme."[122] In the absence of any Government contribution, it seems likely that participation from those not in paid work is likely to be low.

ADDITIONAL CONTRIBUTIONS

84. Once an individual is participating in the scheme, the next question is how much they need to contribute to achieve an 'adequate' income in retirement. In its First Report, the Pensions Commission found that there was "no clear definition of pension adequacy". It looked at the retirement incomes people actually achieved and at survey evidence of their preferences and concluded a reasonable "benchmark" was a replacement rate[123] of 80% for the lowest earners; 67% for median earners and 50% for top earners.[124] In its Second Report it recommended that the role of the state should be to:

  • Ensure through the state pension a replacement rate equal to about 30% of median earnings at the point of retirement;
  • Strongly encourage and enable a further 15% through participation in the personal accounts scheme, contributing at the minimum 8% level from about age 30 (or slightly more - 18% - if they maintain continuous saving from 25)[125]; and
  • Enable additional low cost saving which might deliver a further 15-18%.[126]

Figure 1: Target pension income as a percentage of earnings for the median earner: at the point of retirement

Source: Pensions Commission, Second Report, p 18

85. If a median earner wants to achieve a replacement rate of some 67%, they will need to contribute more than the minimum. Others who might be advised to make additional contributions could include moderate and higher earners and those starting to save later in life. It is unclear how additional contributions are to be encouraged, however. Norwich Union was concerned that the 8% minimum contribution would "create a false illusion that this will provide a comfortable retirement" and argued that a "large scale Government campaign needs to address this and promote the benefits of savings above this level."[127]

86. The White Paper acknowledges that "even with good quality information, all too often member contributions tend to remain at the minimum contribution level."[128] It suggests that one option is for employees "to save more by pre-committing to increase their contributions from each pay rise."[129] The Secretary of State said he was "less convinced" when asked whether the scheme should set targets for additional contributions.[130] The Department should set targets for additional contributions above the minimum 8% and publish a strategy to deliver, and closely monitor, progress.

The implications for employers

87. Auto-enrolment has not been tested at a national level where the employer has to make a compulsory contribution.[131] The way in which employers deal with the new obligations imposed on them will be critical in ensuring the personal accounts scheme is a success. Evidence to the inquiry suggested that there were concerns about the administrative burden and about the compulsory employer contribution, although employer representatives differed in their views: EEF supported the proposal for auto-enrolment and the compulsory employer contribution;[132] the CBI argued that employers should be "offered the same opt-out that employees will enjoy";[133] and the Federation of Small Businesses opposed "the principle of employers being responsible for their employees' pension savings".[134]

88. The Government has estimated that, as a result of the compulsory contribution, "on average, firms would face an increase of their labour cost of 0.6%." David Yeandle of EEF thought it was important to "put a bit of realism" into the debate:[135]

    "There has been too much talk about 3%, assuming it is 3% of all earnings; it is only 3% of a band of earnings, never more than 2½% and, in many instances, will be only 1½% of earnings. If we implement it on a phased basis, with some financial support for small employers, I do think then it is something that we can achieve without causing major problems."

89. Some firms, however, will experience a greater increase in costs than others. The White Paper acknowledged that for micro and small employers these costs will represent a higher proportion of the total labour costs (0.9% compared to 0.6% for all firms) once the accounts are fully phased in. This is because they are "more likely to have no current provision."[136] The Pensions Commission acknowledged that it seemed likely that some small businesses would be "profoundly affected."[137]

90. The White Paper explains that there are several mechanisms employers could use to manage the cost of contributions to personal accounts - in particular passing them on to employees in the form of lower wage increases. The other possibilities it listed were: passing the increase in costs on to consumers via higher prices; reducing investment; or 'levelling down' current pension contributions towards 3%. To the extent that these were not feasible, "firm profits would fall, or employment would adjust". The majority of firms are expected to use the mechanisms. [138]

91. Witnesses suggested that it was difficult to make a judgement at this stage as to what proportion of employers would adopt what mechanisms. David Yeandle of EEF explained that "a lot will depend on the state of the economic environment and the state of the labour market at the point that it comes into effect".[139]

92. Critics of the proposals are concerned that it may amount to a tax on jobs. For example, Susan Anderson of the CBI commented that some employers could offset the costs against future pay increases, but this would not be possible for all:[140]

    "in a large firm […] with heavy unionisation, the union is going to be looking to the employer to make good the employee contribution, never mind accepting a pay reduction."

93. The White Paper also recognised that while there was limited scope for lowering wages where employees were on the National Minimum Wage (NMW), the Low Pay Commission would take account of the cost of compulsory contributions to a pension when making recommendations about the appropriate level of NMW.[141]

Levelling down

94. Levelling down refers to the risk that employers with more generous occupational schemes will reduce their contributions to the level of the new personal accounts scheme. We heard differing evidence on whether this risk would materialise. Susan Anderson of the CBI told us:[142]

    "Employers have got only so much money they can put into pensions, so I think we have to face the fact that if you have got only a 50% take-up rate and you are contributing at 10%, you may well have to level down to 5% for all. It is as much a political decision; if it is felt that is the right thing to do then that is what employers will have to do. There is another option, of course, which is that employers might take the opportunity to move down to 3%, on the basis they have to make hay while the sun shines."

95. Philip Davis, Professor of Finance and Economics, Brunel Business School, said "in a sense it is almost going with the grain of the way employers are cutting contributions anyway. Certainly it is desirable that they do not get levelled down, but there is a risk of that."[143] He saw it as a problem which would primarily affect Defined Contribution schemes.[144]

96. On the other hand, the Chartered Institute of Personnel Directors, on the basis of research conducted with HR professionals, concluded:[145]

    "the introduction of a National Pension Savings Scheme (NPSS) would neither lead to a levelling down nor a cancellation of existing pensions arrangements. More than four fifths of employers, with a few still undecided, say that they would continue with their existing arrangements if Lord Turner's proposals were implemented. Meanwhile only 1% say that they would level down."

97. The Pensions Commission acknowledged and confronted the levelling down risk, noting that an increasing number of companies believed they gained "limited labour market advantage from paying people via pensions rather than cash wages."[146] In its Final Report, it warned that "if the risk of levelling down to the NPSS minimum is severe, there must be a significant danger that employer pension provision will in any case decline […] Indeed in the absence of an NPSS minimum this levelling down could be to a floor of 0% rather than 3%."[147]

98. In evidence to the Treasury Committee, Lord Turner said that "We have 56% of the private sector workforce who are in no non-state pension scheme whatsoever. So is the social priority to bring that 56% up to a minimum or to guard against a levelling down among the 44% who do already get something? I think actually the social priority is to get people up to a minimum."[148]

99. The Secretary of State acknowledged that "Rational economic theory would suggest there will have to be some levelling down" but stressed that "The evidence we have seen suggests that levelling down is likely to be small." [149] He continued:[150]

    "that this was one of the principal concerns that Ministers had studying the Second Report of the Turner Commission preparing ourselves for the White Paper. We did look very, very carefully at the impact of this and the evidence, such as it is, suggests that it is small. This is something we have to watch very carefully in the future."

100. We agree that the Government will need to monitor closely the impact of the new personal accounts scheme on existing occupational provision and guard against levelling down. This will need to be a key aspect of consideration in the regular reviews of the system and the further independent study that we have recommended (see para 35) should be instigated before the end of the next Parliament.

Transitional support

101. The Pensions Commission Final Report stated that even if some of the extra costs were absorbed over time by adjustments in cash wages, there was "at least a transitional burden". It opposed an exemption for small employers but argued that the Government should "consider ways in which the costs for small employers could be mitigated, for instance via subsidies which are fixed as an amount per employer."[151]

102. The White Paper explained that to support employers with the new obligations, contributions, both for employers and employees would be phased in over a three year period, at the rate of 1% per year. In designing the scheme and the transition phase, the priority would be to minimise the burden on employers. The Government continues to consult on transitional support for the smallest businesses and whether a longer phasing period is needed. Furthermore, to allay concerns that the amount of the employer contribution might be ratcheted up over time, the rate is to be placed in primary legislation. [152]

103. Those measures announced so far received support from both employer and employee representatives.[153] As regards the phasing in of the compulsory contribution, for example, Kay Carberry of the TUC said:[154]

    "I do not think that it would be possible to prepare people to the degree that we would not need any phasing in. I think that people, certainly who are beginning from a standing start, would find it difficult, and that goes both for some employers and a lot of employees."

104. Employer representatives had argued strongly that the amount of the employer contribution should be placed in primary legislation. While the TUC had been opposed to setting the amount in primary legislation, the need to achieve consensus had "concentrated.. minds."[155]

105. Discussions between Government and employer representatives about additional transitional support were ongoing. EEF had come up with a suggestion which it thought needed to be discussed with small businesses.[156]

MONITORING AND COMPLIANCE

106. The system of personal accounts proposed in the White Paper would give employees new rights regarding auto-enrolment and access to an employer contribution. The Pensions Commission said on the basis of its focus group work that it seemed likely that " a general level of hostility would persist; some businesses would be profoundly affected; and some businesses at least, would seek to resist any new obligations."[157] The White Paper acknowledged that there would need to be "an effective compliance regime which remains light-touch, risk-based and proportionate." This would include a "range of enforcement powers" for "the minority of cases where non-compliant employers do not respond to initial light-touch approaches."[158]

107. Citizens Advice said that "the introduction of auto-enrolment would need to be carefully monitored to ensure that people are making rational decisions, that they understand the consequences of doing so and are not put under any pressure to opt out by employers."[159] Nigel Stanley of the TUC said that "a clear signal" needed to be sent out to employers that encouraging employees to opt out was "unacceptable behaviour":[160]

    "The comparison which is sometimes made is with the Working Time regulations, in which employees can opt out of that. Frankly, the Working Time regulations probably are the least understood, the least enforced, the most ineffective bit of labour market regulation we have in the UK, and this has to be the exact opposite, it has to be very, very clear. The Minimum Wage is enforced properly, the Inland Revenue are very tough with people who breach it; it does get breached, but clearly it is not acceptable, it is not something that if found out it is cracked down on."

108. Mr Stanley argued that there needed to be ways that employees could "shop employers", investigations of unusual patterns of opting out in workplaces and effective penalties.

109. The Committee welcomes the measures announced in the White Paper to support employers with the new requirements imposed on them by the personal accounts scheme. The Committee is concerned that employers should not encourage employees to opt out and recommends that the Government outline its proposed arrangements for monitoring and enforcing compliance with these requirements, the mechanisms for reporting breaches with compliance and the proposed penalty regime.

HOW AUTO-ENROLMENT WILL WORK

110. The White Paper explained that once the personal accounts scheme is up and running auto-enrolment will apply at age 22; on changing employer; when an individual's earnings reach the lower earnings threshold; and for those who initially chose to opt out but continue to work for the same employer, every three years.[161] Details of exactly how this will operate are still being worked out.[162] The Committee considered that important questions included: when people are asked to decide whether to opt out; when they are given a choice of funds (and how many choices they are given); and whether they are asked to choose providers (see para 123).

111. Employer representatives argued that "there should be a six-month deferment, which would take out the short-term and seasonal workers and also save the small businesses some considerable administrative and burdensome work to be done on that."[163] Doug Taylor of Which? said:[164]

    "I think the danger of creating a long period from starting employment to actually being in the system is that will exclude people who are on a series of short-term contracts, it will have problems for seasonal workers, and so on and so forth. I think the answer is, people should be able to get into the system as quickly as practical, but the actual period that amounts to will not be clear to designate until the system's structure is actually in place. As a principle, I think getting into there as quickly as possible should be our objective."

112. The Pensions Commission suggested that employees might (as in New Zealand) be required to inform the NPSS in their first four weeks if they did not wish to join. Payments would then commence only at the end of the second month.[165]

113. A further question is whether people are asked to decide on which fund they want to invest in at the same time. David Yeandle of EEF outlined what he explained were initial thoughts:[166]

    "We think the choices that individuals have, at the very point when they make that decision whether to auto-enrol or not, should be kept to a minimum. For example, […] at the point of making a decision whether or not to auto-enrol, that is the only decision they have to make. Once they have decided that, we would suggest that the money is put into a holding fund, and then, maybe two or three months later, the organisation that is running a pension scheme would approach the individuals, without the involvement of their employer whatsoever, and give them the option of whether they want to invest that money actively or whether they want to have that invested into a default fund."

114. Further down the line they could be asked whether they wish to choose to invest in a particular type of fund (the Commission envisages between 6-10 choices, with different risk and return combinations),[167] or to invest in the default fund. In the Swedish Premium Pension Scheme (PPM), 90.6% of all individuals now invest in the default fund.[168] This appears to be in part due to the very large number of choices in the PPM (over 700).[169] Nonetheless, an effectively managed default fund, for those who do not wish to exercise this choice, will be essential.

115. Separating the two decisions in this way could also help to allay concerns among employers that they might be asked to be involved with the choice of funds. David Yeandle said that EEF members "feel very, very strongly that the provision of advice is not something that they should be involved in, either directly or indirectly."[170]

116. It seems likely that administering the scheme will be particularly complicated for some employers, for example, those using a manual payroll, employing people on short-term contracts or people with a number of low-paid jobs. Mike Cherry of the Federation of Small Businesses said that "there were some very considerable administrative and practical problems which could arise":[171]

    "Where you have got a manual payroll and somebody is actually having to work it out then you have got issues surrounding that. You have also got problems, of course, where you have got an employee who may be working for two or three employers; it is then a question of, if one is a fairly low payer, or earnings, who actually pays the pension contribution and at what stage that pension contribution is paid."

117. Participating in the new personal accounts scheme should be as simple as possible. We believe that employees should be opted-in within three months of beginning employment. Care will need to be taken to ensure that arrangements for auto-enrolment are workable for firms with employees on 'non-standard' work patterns, for example, temporary contracts or more than one job.

Charges

118. A key objective for the system of personal accounts is to ensure the low cost of operations. The Pensions Commission recommended that the scheme should aim for an Annual Management Charge of 0.3% per year or less.[172] The Committee's visit to Sweden confirmed the importance of keeping charges low. Figures provided by the Premium Pension Authority showed that compared to having no charges at all, an annual management charge of 0.25% led to an 8% reduction in the value of a pension; a charge of 0.5% to a reduction of 15% and a charge of 1% to a reduction of 28%.[173] Charges in the PPM amounted to 0.6% of managed assets in 2005.[174] The PPM is aiming for charges of 0.33% or lower once mature.[175]

119. The Government agrees that it is "critical that charges for personal accounts are maintained at as low a level as possible. Under a 1.5% management charge, an individual saving for 40 years will lose around 20% of their pension compared with a charge of 0.5%."[176] In the White Paper it stated that in the long term, it was confident that it could achieve low charges, although in the short-term "charges will need to reflect the choice of delivery mechanism, funds under management, contract specification and financing arrangements." [177]

120. The Pensions Commission had noted that "Large occupational schemes face these complexities and those with over 5,000 members often operate with total costs at or below 0.3% [...] Very large occupational scheme costs therefore represent a reasonable benchmark for NPSS."[178] However, the Association of British Insurers argued that the primary determinant of costs would be the "level of take-up, and with the Government predicting a range of between 50% and 80% take-up, a wide degree of uncertainty remains."[179]

121. The Government has said it will consider other funding structures for personal accounts.[180] Intelligent Money says people are put off saving because they do not understand the charging system and has therefore recommended a fixed administration fee, rather than one based on fund size.[181] Asked about this, Richard Saunders of the Investment Management Association said it was "essentially a contractual issue to be settled at the time when the administrators are being hired and the competition is being run. [182] Stephen Haddrill of the Association of British Insurers said:

    "It is worth looking at, but I think it is quite a difficult proposition, because the annual management charge approach basically subsidises the poor, or the lower contributor. If we are talking about very low levels of contribution, I think that cross-subsidy is probably going to be necessary, and particularly in the early years. I think people could find the flat fee was actually going to come out at really quite a high level, so I am not sure it is going to work, particularly at the beginning."

122. The Committee agrees with the Pensions Commission that the focus should be on keeping Annual Management Charges as low as possible in order to increase retirement incomes. The Committee notes that if charges cannot be driven towards or below 0.3% over time it would substantially erode the value of people's pensions. We believe that the option of fixed administrative fees should be considered but note that the impact of such a charging structure on those saving small amounts would have to be considered as part of that review.

Competition for contracts, or through branded providers?

123. The White Paper proposes two alternative delivery models for the provision of a system of personal accounts:

124. The Department's "initial analysis suggests that the best delivery model is that proposed by the Pensions Commission."[184] It will judge the options against eleven criteria which include: the level of charges; value for money for the taxpayer; the appropriate type of consumer choice; simplicity for employers and individuals; the promotion of personal responsibility; and maximising effective competition.[185]

125. Of these criteria, two seemed particularly important to the Committee - charges and simplicity for employers and individuals. The Pensions Commissioners continue to argue that "a single national scheme, rather than a multi-provider model, will deliver the lowest cost and thus the highest possible pensions to savers."[186]

126. As regards simplicity for employees and individuals, evidence to the Committee suggested that, again, this was another advantage of the single-provider model. Doug Taylor of Which? argued that it was important that the scheme was "clearly understood, with a brand that is clearly identified". He suggested that having a "universal" system would be important in helping to engage people moving from one employer to another and in particular seasonal workers and people on short-term contracts.[187] David Yeandle of EEF argued that the single-provider model would also work better for employers in that it would minimise administrative burdens, result in lower costs and "minimise the choices that employers would have to make."[188] On the other hand, the Association of British Insurers stressed that a limited range of choices could be provided, giving "employers the opportunity - but, importantly, not the duty - to pick a default provider for their workforce, increasing employers' engagement in the system and sense of control over the process."[189]

127. The Government has set out a list of eleven criteria against which it intends to assess the two proposed alternative delivery models. We believe that two of these are particularly important: achieving a lower level of charges and simplicity for employers and individuals. For this reason, the Committee accepts the Government's initial view that this can be achieved through the delivery model proposed by the Pensions Commission. However, we await with interest the outcome of further work to establish whether similar objectives could be achieved through a limited multi-provider model.

Investment risk

128. A number of organisations suggested the policy of auto-enrolling employees into a Defined Contribution scheme, where the investment risk is borne by the individual, could be problematic if people did not understand the risks they were taking and the inevitable 'risk/return trade-off.' Doug Taylor said that research by Which? showed that people prefer a low-risk, low return product to a higher-risk , higher return product and that the features of pensions people valued most are "the levels of guarantee and certainty that may exist."[190]

129. Richard Saunders of the Investment Management Association argued that it would be "irresponsible not to put people into high risk assets when they do not have to get at those assets for decades." He argued that risk can be managed through a 'lifestyle-smoothing' approach,[191] which involves relatively high exposure to higher risk investment at early ages, and a gradual shift to very low risk investment as people approach retirement. This is the Commission's recommended approach for the 'default' fund for the personal accounts scheme.[192]

130. However, as Richard Saunders acknowledged, even if risk can be managed, it "can never be taken out."[193] A number of witnesses raised the question of how individuals might react if they were disappointed with the returns received. The Pension Reform Group, for example, was sceptical that future Governments would be able to avoid the risk of being accused of "mis-directing savings into schemes which perform differently for members of each scheme over time, depending when in the equity/bond cycle members draw out their savings".[194] Referring to the recent report of the Parliamentary and Health Service Ombudsman, the Rt Hon Frank Field MP said that:[195]

    "Now if we can have a huge fuss over a form which almost nobody has seen, which is the Government form telling us to save in occupational schemes, what are the charges going to be of a scheme that is set up by the Government and which, to some extent, the Government is regulating, given that Lord Turner says there will be three funds in this scheme and, therefore, at any one time the funds are bound to be performing differently? So the charges that 'I was misinformed' are going to be great, but they are going to say: 'Well, there wasn't any money there for giving you advice.'"

131. In oral evidence, the Secretary of State said:[196]

    "There is a risk associated with all forms of investment and we have made that absolutely explicit in the White Paper. There is no question of any Government underwriting the value of people's savings in personal accounts. That simply is not possible. There needs to be the appropriate regulatory arrangements in place, and there will be. There needs to be safeguards, and there will be. There will be legislation dealing with all of these matters in terms of governance, but in terms of the investment risk itself that is clearly there. It just needs to be identified and people need to be clear about it."

132. Ensuring people are informed about risk, while at the same time encouraging them to save will be a difficult balancing act. Lord Turner told the Public Administration Committee that: [197]

    "There is always a risk; nothing is absolutely cast iron. That point is not very often made and it should be. However, there is obviously a need to encourage and get more people to save for their pensions, and so this is a difficult area to get right."

133. The Parliamentary Ombudsman, in her recent report, Trusting in the Pensions Promise argued that to empower people in the choices they have to make, it is important that they "should be as clear as possible about what citizens can expect from others and what their own responsibilities are." She concluded that "ensuring that the information provided to the public is accurate and complete while being accessible remains a challenge for DWP."[198]

134. The Government has a responsibility for the running of the macro-economy and the regulatory framework for pensions. It does not have a responsibility for investment risk in the new system of personal accounts, but Government and regulators will have an obligation to communicate the risks and benefits clearly while still encouraging participation in the scheme. In response to this report, the Government should set out how it proposes to do this. We agree with the Pensions Commission that the default fund should be a 'lifestyle-smoothing' fund with a relatively high equity weight at early ages, and a gradual shift to bonds as people approach retirement.

Governance arrangements

135. Organisations such as IMA and Which? argued that appropriate governance arrangements needed to be put in place to reduce risk. The IMA identified the need for "independent governance" as a gap in the Pensions Commission's proposal. It argued that the personal accounts scheme needed "to be set up in a way which operates in the interests of members and minimises political risk. This requires that:

136. Which? also argued that the scheme should be managed by an "independent board consisting of consumer, employee and employer representatives with an explicit legal duty to look after the interests of scheme members and be legally accountable to the public." It argued that, in contrast, "the retail pensions model has weak systems of governance and major conflicts of interest. Under UK company law, directors of firms have a primary legal duty to shareholders balanced with what we think is a fairly weak regulatory duty to 'treat customers fairly.'"

137. The Committee agrees with Which? and the IMA that governance arrangements - ensuring the scheme is overseen by trustees which are independent of Government and have an overriding duty of care to protect the interests of savers - will be critical to the scheme's success. Independence will also be vital to ensure that corporate governance standards are not compromised. Political interference in investment strategy and on how the voting rights of the personal accounts scheme investments are exercised would be unacceptable.

Setting up the new scheme

138. The Pensions Commission noted that the establishment of the new scheme would involve "significant operational set-up risks." In oral evidence, the Secretary of State said:[199]

    "There are the obvious operational risks associated with setting up and managing a new scheme like this that could have 6, 7 or 8 million people paying into it on a regular basis. It is a major operational undertaking and comes clearly with a risk of operational failure which we have to deal with. There is IT. Let us get that out on the table now."

139. The White Paper includes details of the features and functions that would need to be centralised for delivering a personal accounts scheme. There is to be a "simple, low-cost payment collection system" and further centralised functions are to include the allocation of a default provider or fund and ensuring contributions are made to a single account, and providing information from a central point.[200] It argues that "Government involvement in delivery should be minimised".[201] The Treasury Committee concluded that there was "a possibility of effective public sector purchase of relevant administrative services from the private sector, provided that the purchasers on behalf of the NPSS or any similar national scheme have the relevant skills, whether acquired in the public or private sectors. It is important that overall administrative costs are minimised and that an appropriate balance of risk between public and private sector is achieved."[202]

140. Christine Farnish of the National Association of Pension Funds argued that setting up a new clearing house to deal with the new accounts was a "big, new challenge, I think, for the Government to make sure that is set up properly. I cannot see who else is going to set it up." [203]

141. Richard Saunders of the Investment Management Association commented ideally one would want to "piggy-back on PAYE and National Insurance, because essentially they are in the business of collecting and verifying contributions from employers." However, he understood from HMRC that there were "significant technical issues in using the existing PAYE system for this purpose."[204] He added that the industry was in a good position to gear up for delivering other core activities - account administration and investment - that would be required for the new scheme:[205]

    "Within the UK mutual fund industry currently there are 18 million accounts and there are a number of very large providers of administration services to mutual fund companies. The largest has, I believe, already more than five million accounts. The functionality of the systems that these people use is very close to that which will be required by the NPSS, so that, in that situation, it would be logical for the board of the NPSS to run a competition to find a provider of administration services. I can think of at least half a dozen firms which might be interested in competing for that business; in fact, I know of three who are examining it actively, even today"

Stephen Haddrill of the ABI was more cautious on the basis that the proposals covered a different target group from that served by industry at present:[206]

    "Firstly, this new system is designed to reach people on relatively low incomes, it is designed to reach people who may well be quite financially illiterate… Also it needs to reach employers down to the corner shop level. It is a much harder task, I think, than reaching the current market, and there will be new problems that emerge.. we need people with a great deal of expertise and that expertise will need to be built up over time."

142. The Government argued that one of the potential advantages of the multi-provider model is that it "would rely to a greater extent on the existing infrastructure and could therefore have advantages when coming to implementation."[207] However, Which? argued that "the critical point is that the necessary time should be taken to implement the reforms properly." [208]

143. The Government and Pensions Commission have rightly recognised that establishing the infrastructure for the new system of personal accounts will be a challenge. We strongly recommend that Government involvement in the development of any necessary IT system is based on a clear understanding of lessons learned from previous government IT systems failures.

Conclusion

144. One of the questions in the remit for our inquiry was whether the new system of personal accounts was the right way forward. Witnesses identified a number of risks with the proposals - the risk of establishing a large new operational infrastructure, for example, and the risk that the Government will be subject to claims of mis-selling in the future. The Committee agrees that these are genuine concerns that the Government will have to guard against as the proposals are implemented.

145. We recognise, however, that the White Paper reforms are a package and that the success of the personal accounts scheme will be critical if people on median incomes, in particular, are to have adequate retirement incomes in the future. In evidence to the Committee on 7 June, the Secretary of State said: [209]

"The question for us is how much more and how many more people we can get to save. This is going to be the acid test for these reforms, and I accept that. The whole balance between what we were doing on personal accounts and then the complementary reforms for the State Pension are designed fundamentally to generate more savings, to provide people with the peace of mind to know that it is worth their while to save. That is what we have to do."

146. The key target group - people on around £10,000 to £30,000 who are not saving for a pension - include the self-employed and those in small businesses. Maximising their participation will be a significant challenge: there is to be no automatic enrolment process for the self-employed and small businesses have expressed profound concerns about the new obligations the scheme will impose on them.

147. We believe that the provision of generic advice will be important in maximising participation - ensuring that people are able to make informed decisions as to whether to prioritise more immediate financial commitments, for example, and ensuring that where people opt out, they understand the implications of doing so. It will also be important in helping people make decisions about whether to contribute more than the minimum. The way in which auto-enrolment operates and the choices people are given will be critical to the scheme's success.

148. As the Pensions Commission said, the success of the personal accounts scheme "in achieving high participation and adequate contribution rates should however be kept under constant review to identify whether changes are required to achieve the objectives."[210]



59   Pensions Commission, Second Report, November 2005, p 7 Back

60   White Paper, para 1.46 Back

61   Pensions Commission, Second Report, November 2005, p 7 Back

62   White Paper, para 1.46-48 Back

63   White Paper para 1.106. 1% represents basic rate tax relief on individuals' contributions - in addition, individuals may be entitled to higher-rate tax relief and neither employers nor employees pay tax or National Insurance contributions on employer contributions. Back

64   White Paper, para 1.72 Back

65   Pensions Commission, Second Report, November 2005, p 282 Back

66   Pensions Commission, Second Report, November 2005, p 18-19 - this was to be assumed through savings starting at age 30, an average rate of return before Annual Management Charges of about 3.5% (p 274). Back

67   Ev 399, para 69 Back

68   White Paper, para 1.102 Back

69   White Paper, p 197, figure E.v Back

70   White Paper, p 42, box 1a Back

71   Pensions Commission, Second Report, November 2005, p 7 Back

72   Pensions Commission, Second Report, November 2005, p 157 Back

73   Pensions Commission, Final Report, April 2006, p 17 Back

74   Q 194-5 Back

75   Q 69 Back

76   Q 254 Back

77   Treasury Committee, Fifth Report of Session 2005-06, The Design of the National Pension Savings Scheme and the Role of Financial Services Regulation, HC 1074-II, Q 211 Back

78  Treasury Committee, Fifth Report of Session 2005-06, The Design of the National Pension Savings Scheme and the Role of Financial Services Regulation, HC 1074-II, Q 210 Back

79   Q 507 Back

80   Q 507 Back

81   Ev 273, para 15 Back

82   Ev 273 Back

83   Ev 273, para 17 Back

84   Ev 273, para 18 Back

85   Ev 273, para 21 Back

86   Ev 273, para 23 Back

87   Ev 273, para 24 Back

88   Treasury Committee, Fifth Report of Session 2005-06, The Design of the National Pension Savings Scheme and the Role of Financial Services Regulation, HC 1074-I, para 38 Back

89   Ev 265, para 820; Ev 273, para 15; Q 506 Back

90   Q 508 Back

91   Financial Services Authority (July 2004), 'Building financial capability in the UK: the role of advice' Back

92   Treasury Committee, Fifth Report of Session 2005-06, The Design of the National Pension Savings Scheme and the Role of Financial Services Regulation, HC 1074-I, para 51 Back

93   Oral Evidence taken before the Work and Pensions Committee on 14 December 2005, HC (2005-06) 815, Q 27  Back

94   Pensions Commission, Final Report, April 2006, p 20; Q 254 [Nigel Stanley]; Q 455 [Richard Saunders]; Treasury Committee, Fifth Report of Session 2005-06, The Design of the National Pension Savings Scheme and the Role of Financial Services Regulation, HC 1074-I, para 38 Back

95   HC Deb, 8 May 2006, col 7 Back

96   Those on Savings Credit see 40 pence of their benefit withdrawn for every pound of pension income above a threshold level but are roughly compensated for this by the fact that their employer contributes about 40% of the 8% minimum contribution. See Ev 399 Back

97   Ev 380 Back

98   White Paper, Volume 2, para 2.59 Back

99   White Paper, Figure 1.xiv Back

100   Q 256 Back

101   Ev 375 Back

102   Ev 375 Back

103   Pensions Commission, Second Report, November 2005, p 287 Back

104   Uncorrected transcript of oral evidence taken before the Work and Pensions Committee, 3 July 2006, HC (2005-06) 1389, Q 47 Back

105   Treasury Committee, Fifth Report of Session 2005-06, The Design of the National Pension Savings Scheme and the Role of Financial Services Regulation, HC 1074-II, Q 195 Back

106   Pensions Commission First Report, October 2004, p 62 Back

107   Pensions Commission, First Report, October 2004, p 62 Back

108   White Paper, Volume 2, figure 2.vi Back

109   Pensions Commission Final Report, April 2006, p 22 Back

110   Pensions Commission Final Report, April 2006, p 22 Back

111   Pensions Commission, Second Report, November 2005, Appendix F, p 151-3 Back

112   Pensions Commission, Second Report, November 2005, Appendix F, p 151-3 Back

113   Pensions Commission, Second Report, November 2005, Appendix F, p 154 Back

114   Q 432 Back

115   Association of Consulting Actuaries, Placard, Issue 23, April 2006, p 14 Back

116   Pensions Commission, Second Report, November 2005, p 278 Back

117   Ev 353 Back

118   White Paper, para 1.94-95 Back

119   White Paper, para 1.96 Back

120   White Paper, volume 2, para 2.58 Back

121   Ev 128, para 39 Back

122   Treasury Committee, Fifth Report of Session 2005-06, The Design of the National Pension Savings Scheme and the Role of Financial Services Regulation, HC 1074-II, Q 198 Back

123   Income just after retirement as a percentage of income just before. Pensions Commission, First Report, October 2004, p 138 Back

124   Pensions Commission, First Report, October 2004, p 142 Back

125   Pensions Commission Second Report, November 2005, p 274 Back

126   Pensions Commission, Second Report, November 2005, p 282 Back

127   Ev 238 Back

128   White Paper para 1.132 Back

129   White Paper, p 77, Box 1 Back

130   Uncorrected transcript of Oral evidence taken before the Work and Pensions Committee on 3 July 2006, HC (2005-06) 1389, Q 49 Back

131   Q 45 [Alison O'Connell] Back

132   Ev 207, para 8 Back

133   Ev 357, para 22 Back

134   Ev 353 Back

135   Q 433 Back

136   White Paper, Volume 2 para 294-5 Back

137   Pensions Commission, Second Report, November 2005, Appendix F, p 151 Back

138   White Paper, Volume 2, para 2.100-02 Back

139   Q 433  Back

140   Q 432 Back

141   White Paper, para 1.128 Back

142   Q 430  Back

143   Q 73 Back

144   Q 73 Back

145   Ev 337 Back

146   Pensions Commission, Second Report, November 2005, p 54 Back

147   Pensions Commission, Final Report, April 2006, p 38 Back

148   Treasury Committee, Fifth Report of Session 2005-06, The Design of the National Pension Savings Scheme and the Role of Financial Services Regulation, HC 1074-II, Q 222 Back

149   Q 261 Back

150   Q 261 Back

151   Pensions Commission, Final Report, April 2006, p 22 Back

152   White Paper, paras 1.129 and 1.130 Back

153   Q 374- 9; Ev 207, para 7 Back

154   Q 374 Back

155   Q 379 [Kay Carberry] Back

156   Q 434 [David Yeandle] Back

157   Pensions Commission, Second Report, November 2005, Appendix F, p 151 Back

158   White Paper, para 1.58-61 Back

159   Ev 263, para 7.7 Back

160   Q 380 Back

161   White Paper, para 1.89-90 Back

162   White Paper, para 1.141 Back

163   Q 422 [Mike Cherry] Back

164   Q 253 Back

165   Pensions Commission, Second Report, November 2005, p 369 Back

166   Q 419 Back

167   Pensions Commission Second Report, p 373-6 Back

168   Pensions Commission, Second Report, p 200 Back

169   Q 72 [Nicholas Barr]; Pensions Commission Second Report, p 373 Back

170   Q 42 Back

171   Q 414 [Mr Cherry] Back

172   Pensions Commission, Second Report, November 2005, p 8 Back

173   Presentation to Committee by the PPM on 9 May 2006 Back

174   Review of the Swedish PPM http://www.regeringen.se/content/1/c6/05/19/48/72712aef.pdf Back

175   Pensions Commission Second Report, Appendix F, p 238 Back

176   White Paper, para 1.78 Back

177   White Paper, para 1.79 Back

178   Pensions Commission, Second Report, November 2005, p 396 Back

179   Ev 231, para 3.10 Back

180   White Paper, para 1.78 Back

181   Ev 413 Back

182   Q 470 Back

183   White Paper, p 52 Back

184   White Paper, para 1.71 Back

185   White Paper, para 1.71 Back

186   "The Pensions Commissioners welcome White Paper", Pensions Commission press release, 25 May 2006 Back

187   Q 520  Back

188   Q 491 Back

189   Ev 229 Back

190   Q 510  Back

191   Q 473  Back

192   Pensions Commission, Second Report, November 2005, p 200 Back

193   Q 473 [Richard Saunders] Back

194   Ev 142, para 3 Back

195   Q 150 Back

196   Q 269 Back

197   Uncorrected transcript of oral evidence taken before the Public Administration Committee on 22 June 2006, HC (2005-06) 756-iv, Q 360 Back

198   Parliamentary and Health Service Ombudsman, Sixth Report of Session 2005-06, Trusting in the Pensions Promise, HC 984, para 8.7-20 Back

199   Q 269 Back

200   White Paper, p 48-49 Back

201   White Paper, para 1.50 Back

202   Treasury Committee, Fifth Report of Session 2005-06, The Design of the National Pension Savings Scheme and the Role of Financial Services Regulation, HC 1074-I, para 68 Back

203   Q 466 Back

204   Q 466 Back

205   Implementing a National Pension Savings Scheme, Paper by IMA, February 2006; Q 461 Back

206   Q 466 Back

207   White Paper, para 1.69 Back

208   Ev 156, 67-68 Back

209   Q271 Back

210   Pensions Commission, Second Report, November 2005, p 9 Back


 
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