01 June 2007
Consumer interest groups are pushing for a key decision-making role over the way that cash in the state-run Personal Accounts pensions scheme will be invested.
Work and Pensions Secretary John Hutton last week said the system, which will pool government, employer and employee contributions into pensions for people without current provision from 2012, would be a trust-based occupational scheme. 'A board of trustees will take ultimate responsibility for setting the strategic direction for the scheme from the collection of contributions to the investment of assets and payment of benefits,' Hutton told a National Association of Pension Funds conference on May 24.
As it will be a defined contribution scheme, members will assume the risk attached to any investment, making adequate representation of their interests vital. Many experts assume it would be split 50:50 between employer and employee nominees, as the government has pushed for a similar balance in other schemes.
Others argue that consumer groups such as Citizens' Advice and Which? should have direct representation. A spokesman for Pensions Investment Research Consultants, which advises on governance, told Public Finance: 'At the very least there should be equal member and employer trustees, and there is a good argument to be made that members should form the majority. One option would be to split the trustee board into a third members, a third employers and a third consumer representatives.'
A senior DWP source said the make-up of the board would be made clearer in a government response to the consultation paper on Personal Accounts next month, but details might not be finalised until later this year.
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