18 July 2006
Richard Saunders, the Chief Executive of the Investment
Management Association, has outlined three key points which he
believes are essential to the successful introduction of a system
of personal accounts.
Speaking at the Department for Work and Pensions summit on
pension reform, Mr. Saunders emphasised that the National Pensions
Saving Scheme (NPSS) would need an independent board, accountable
to Parliament, not only to ensure full separation from the
Government, but also to allow investment decisions to be taken by
experienced investment professionals from the private sector.
He went on to say that with 80-90% of people in occupational DC
schemes currently choosing the default option, it would be
essential to ensure a good default fund with responsibility for
design and asset allocation in the hands of the NPSS board.
Finally, Mr. Saunders argued that the administration of the NPSS
should be a single, central platform, separate from investment
management, providing a single point of contact for both employers
and employees, hence providing the simplicity that is essential to
making the scheme a success.
Mr Saunders commented: "Statutory auto-enrolment will create a
completely new set of obligations for employers, employees and
Government. The way to manage those most effectively is through
robust governance structures and professional oversight of the
money of those who will not feel able to make investment choices on
their own. The NPSS continues to offer the best hope for achieving
that."
