ABI queries Turner on pension costs
UK – The head of the Association of British Insurers has queried the feasibility of the Pensions Commission’s proposal for a national pension system with very low costs.
The Commission, headed by Lord Turner, has advocated a state-administered savings scheme with costs of around 0.3% of assets.
"I don't think that 0.3% is achievable," ABI director general Stephen Haddrill was quoted as saying in an interview with Reuters.
It added that Haddrill declined to comment on the feasible fee level – although he some large group pension schemes are run for fees of between 0.5-1%.
But he was quoted as saying the proposal could be cost competitive.
"If we get the same basic framework (as proposed in the report) -- automatic enrolment, simple advice -- it will be competitive in cost terms with the state solution," he told the agency.
The government has challenged the industry to formulate its own proposals by the end of next month.
The Commission’s report states that pensions sold to people of modest means working are usually sold with an annual management charge of around 1% or higher. The stakeholder pension is capped at 1.5%.