State Subsidy For Personal Accounts:Pensions

Pensions

The Government has not ruled out a state subsidy for the style personal accounts for pensions.  The Pensions Bill has included a provision to give financial assistance to the Personal Accounts Delivery Authority in the form of Grants, loans or indemnities.

Mike O’Brien Minister for pensions reform believes Personal Accounts will pay for themselves, they will also operate within an annual fund management charging structure of 0.3 per cent – 0.5 per cent.

Our view

Will personal accounts be a good thing? We think that forcing both employers and employees to contribute to a pension in the form of Personal Accounts, will mean that people merely redirect existing savings rather than save more.  The low management charges of up to 0.5% are already available today, so we this more as a route to bringing in compulsory private pensions rather than anything else.

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