The Personal Accounts Delivery Authority (Pada) has launched a discussion paper on investment for personal accounts which will be introduced in 2012.

The responses to the discussion paper will inform Pada's recommendations to the trustee corporation regarding the design of the personal accounts scheme. The scheme will be run by a not-for-profit trustee corporation, solely in members’ interests.

One of the key questions considered within the paper is how to meet future members’ needs at low cost. Pada anticipates that the majority of members (low to moderate earners) will be invested in the default fund so there is particular, although not exclusive, focus on this fund.

The document covers a range of key investment issues including:

  • The investment objective and design of the default fund
  • The investment approach as members near retirement
  • Achievement of high quality corporate governance
  • Responsible investment and its role within the scheme
  • The number and types of further fund choice that should be made available.
  • All aspects of the investment approach need to be matched to members’ characteristics (and their likely attitude to risk) and must be consistent with delivering a low-charge, value-for-money scheme.

    Tim Jones, chief executive of Pada, said: “This discussion paper seeks to draw on the experience and expertise of the investment industry, pension scheme providers, consumer groups, employers, and existing trustees to help Pada design a pension scheme that will provide the best outcomes for future members as well as access to low-cost pension savings.”