Duncan Howorth, managing director of JLT Benefit Solutions, said it is arguable a well-structured and sophisticated personal accounts default may be all many pension savers need once contribution limits are lifted years down the line.
Delegates argued that the private sector will have to come up with real differentiators if it is to succeed in the battle with personal accounts.
Advisers predicted that private sector arrangements, which will not be able to justify higher charges simply on grounds of wider fund choice, will differentiate themselves in terms of member communication, engagement and education, giving employers more value through higher appreciation of the benefits being offered, while giving staff the opportunity to better match their investments with their risk profile.
They also questioned whether the performance of an employer’s default fund against personal accounts is in itself a sufficient measure of success. Robin Hames, head of technical, marketing and research at Bluefin said one measure of success could be the extent to which employees opted out of the default altogether.
Howorth said: “You have to take the view that personal accounts will work. If it does you could argue that it is all people need. If you look a little further ahead, say to 2017, a lot of the limitations of personal accounts, such as accepting transfers, will have been taken away. In terms of investment, it is going to be the bellwether and the benchmark that everyone will have to perform against.”
Hames said: “I would hope that the industry can do a better job of communicating to people and explaining to them what their investments mean than personal accounts will be able to. And if it cannot, then we do not deserve to succeed.”
Supplement – Countdown to 2012 – Shaping the Delivery of Workplace Pensions
