Compulsory Personal Account Pensions Undermined

Compulsory Personal Account Pensions Undermined

A government savings scheme aimed at low earners could deter people from joining personal accounts, a consultant warns.  The Savings Gateway will give eight million low earners access to saving, with each pound saved matched by a contribution from the government.  

But Hewitt’s actuary Russell Agius said the scheme was aimed at exactly the same target as personal accounts and would be more attractive to low earners.  He said “Why would anyone want to contribute to personal accounts if they get better access to their savings in this new scheme? Companies do not have to contribute to this either so it looks more attractive to them too”.

Our view

We agree but suggest that Government will impose compulsion on personal account contributions with no opt out option for low cost savings.  

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