The government’s proposed national pensions savings system of personal accounts has been roundly defended as being “better than nothing” by the chairman of the Personal Accounts Delivery Authority at the National Association of Pension Funds (NAPF) conference.
Speaking at the conference in Edinburgh, Paul Myners, chairman of the Personal Accounts Delivery Authority (PADA), said: "Personal Accounts rates will be a matter for parliament [to decide], however an 8% pension contribution is better than nothing."
Myners explained that the current Pensions Bill will result in an auto-enrolment mechanism into pension schemes, 3% contributions from employers, 4% from employees and 1% from the government.
He also stated that the personal accounts scheme would form the largest pension scheme in the UK with between four and seven million members and up to 1 million employers taking part.
Currently employers are not permitted by a European directive to auto-enrol staff into contract-based defined contribution pension schemes such as group personal pension (GPP) or a stakeholder scheme. Commenting on this, Myners considered that master trust pension schemes, where the scheme trustees are employed by the pensions provider, is a possible alternative. He said: "There is a continuing challenge to auto-enrol staff into GPPs. We will continue to persuade Europe to allow this, but if we are unable to we will look to master trusts."
Looking to the future of personal accounts, Myners said: "Personal accounts are designed to complement, not replace current provision. I envisage that they will suit people that are not participating in any scheme at all.
"A personal account will be more like a savings scheme than a pensions scheme, at the moment it is like a house without furniture and will be an ongoing process.
"We will change the landscape [of pensions] in a complementary manner and in a professional manner with the help of the NAPF."