Tuesday, 29 April 2008

Personal Accounts charging

I haven't really being paying enough attention to what is going on with Personal Accounts policy. PADA released this consultation doc on the charging structure for PAs a few months back. The deadline for responses has just elapsed and so far I've not seen any TU responses to it.

Very broadly a number of options are available. The big two really are an annual management change (AMC) or a charge on contributions. Other options include an annual flat fee and a joining charge. I'm personally more drawn to the contributions charge on the basis that a) it strikes me as pretty fair and b) it will help the scheme get properly funded pretty quickly. There is a danger that if it doesn't start making its start-up costs up pretty quickly then some people might start attacking it. Already PADA is taking flak over consulting fees - see FT today.

Anyway, the Pensions Policy Institute has produced a useful overview of the charging options and their pros and cons which can be accessed here. From what I have read a few people are favouring a mixture of an AMC and a contributions charge, but to be honest I have no idea how the lands lies at present.

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