The Department of Social Security (DSS) has issued a consultation document about Stakeholder Pensions and, in the introduction, John Denham, the Parliamentary Under Secretary of State for Social Security says "we are determined to develop a better second pension option for the workers who are not well served by existing arrangements. People on low earnings, many of them women, and those who change their jobs frequently, are the least likely to be able to build up a good value second pension. Typically they work for employers who do not offer occupational pensions and the amounts that they can afford to pay in or their working patterns make many personal pensions unsuitable for them".
The consultative document sets out the Governments objectives for a new type of pension scheme and seeks views on the many technical issues that arise in its development. The aim of the Stakeholder Pension is to provide a second funded pension which is:
Mr. Denham also said "everyone deserves a chance to build up a secure retirement income but there are millions who do not get this opportunity. They are caught in a trap: the basic state pension alone will not offer them a sufficient income to provide a comfortable retirement. They can’t join an occupational scheme and personal pensions can be too expensive and not offer value for money and, therefore, if they are employees, their second pensions are constrained to the level provided by SERPS. We are determined to see that such people gain a decent and secure retirement".
It will need to offer economies of scale by pooling savings, be easily accessible so that workers can make regular contributions, particularly in the workplace, and it will allow new partnerships to develop between financial services companies, retailers, employers, employees and trade unions and other groups, to promote pensions.
Stakeholder pensions will also have to provide effective protection of members’ interests, give members the chance to contribute to decisions on the management of the scheme, be available to the self employed and be approved by a Regulator, so that people have confidence in it; and allow people to contract out of SERPS into the new pension scheme.
Alec Samuels, a member of the NfCG Legislation and Consumer Affairs Committee, is preparing a response on behalf of NfCG, which has to be in the hands of the Pensions Review Team by 31st January. If anyone has ideas to contribute please get in touch with him as soon as you can. His address is - 14 Redhill, Bassett, Southampton SOl 7DB.
To make a sensible contribution you need to read the consultation document. This runs to 36 pages which is why the Editor has not attempted to condense and paraphrase it. Copies can be obtained, free, from:
Gwenllian Williams,
Pensions Review Team,
11th Floor, The Adelphi,
1 to 11 John Adam Street,
London WC2N 6HT
(consultation closes January 1998)
Click arrow for
Contents Table
Click Logo to Return to
Main Magazine Index