Memorandum submitted by Which? (PE 23 - C)

Suggested amendments to Clause 62 (2) on the principles that PADA must have regard to

1. Amendment to Clause 62 (2) (a) on participation

Page 29, line 5 after 'participation' insert 'amongst appropriate eligible employees'


Page 29, line 5 leave out 'qualifying schemes' and insert 'a scheme established under section 50'


1.1 Purpose

This amendment would ensure that PADA's role is to promote Personal Accounts to their target market, and not a broader remit as suggested by 62 (2) (a).

1.2 Argument

Which? believes that Clause 62 (2) (a) may be too broadly worded. It states that PADA must encourage and facilitate participation in all qualifying schemes, not just Personal Accounts. This might mean that PADA's role extends beyond the development of Personal Accounts to encouraging participation in other qualifying schemes such as Group Personal Pensions.


2. Amendment to Clause 62 (2) (c ) on high quality schemes


Page 29, line 9, leave out 'qualifying' and insert 'high quality'


Page 29, line 11 at end insert-

'taking account of levels of employer contribution, standards of governance, low charges, an appropriate investment choice and the availability of a good default option"


2.1 Purpose


This amendment seeks to broaden the definition of what a qualifying scheme is to include more than just the level of employer contributions.


2.2 Argument


Which? believes clause 62 (2) (c) is not broad enough. It states that PADA must minimise the impact on qualifying pension schemes. Instead, we would prefer if PADA must minimise the impact on other high-quality pension provision. As currently drafted, the criteria for qualifying pension schemes only relates to the level of employer contributions. Our view is that a definition of high quality pension provision should also include good standards of governance, low charges and appropriate investment choice, including a good default option. In the DWP's response to the White Paper submissions, the DWP indicated that PADA would need to have regard to the principle of "minimising the impact on other high quality pension provision"[1] but this wording is not now used in the bill. This amendment seeks to incorporate it.



3. Amendment to Clause 62 (2) - information


page 29, line 18 at end insert-

'(g) the need to ensure the availability of clear and robust information and generic advice to members and future members of the scheme'


3.1 Purpose


This amendment adds an additional principle that PADA must ensure that information and generic advice is available to consumers.


3.2 Argument

Which? believes the success of Personal Accounts will require good communication and appropriate advice systems for employees and employers.


4. Amendment to Clause 62 (2) (e) - investment choice

page 29, line 14, after 'the' insert 'needs and'

Page 29, line 16 at end insert-

'provided this can be done at no disproportionate cost to the scheme overall'


4.1 Purpose

These amendments have already been tabled by the Opposition frontbench (amendments 44 and 45). Their effect is to ensure that the needs and preferences of members are taken into account but only if this can be achieved without disproportionate cost.

4.2 Argument

Which? supports these amendments because we believe that managed choice with a limited number of funds graded by risk is the best option for consumers. Our research suggests that consumers could be confused if a large number of funds are available through Personal Accounts. We also believe that any supplementary branded provision should not add costs to the system.

January 2008

[1] DWP, Personal Accounts White Paper, Summary of consultation responses, page 31