The UK government's consultation on its planned stakeholder pension has produced a number of stark warnings from the pensions in-dustry about the perils facing the re-form if the tax treatment is not correct.
Attention has focused on the ex-pected competition between the stakeholder pension and another new but more short-term savings vehicle -the individual savings account (ISA) - with the NAPF calling for the latter's delay.
Pensions minister John Denham has welcomed the scale of the response with 171 associations and companies making submissions. The government will put forward its own proposals in the first half of this year.
NAPF director general, Ann Robinson said: There are clear indications that the government is approaching the issue of incentives to saving from the wrong end."
She called on the government to declare the achievement of "the deepest and widest pension coverage" as its first priority.
"Other initiatives to encourage in-dividual savings should be fitted around that and receive tax and other incentives proportionate to their priority.
"No decision should be taken on the tax treatment of ISAs until the outcome of the Government's pensions review is clearer."
The Association of British Insurers (ABI) has also stressed that the new pensions vehicle must be viewed in the context of all savings vehicles saying: "There is a need to clarify how the government's welfare state reforms fit together." The key characteristic for the ABI is that the new pension should be "simple and cheap to operate".
ABI director general, Mark Boléat warned: "It is important to remember the conflict between providing cheap products and providing products suitable for those on low incomes."
The ABI also suggested that in the interests of simplicity, only four products should be available as a stakeholder pension: a broad-based equity fund, a managed fund product, a with-profit product and a fixed interest product. This would omit the need for financial advice to be given to a financially unsophisticated population while avoiding another tier of costs.
The theme of simplicity was echoed by the Association of Consulting Act-uaries (ACA), consultants Mercer and the Pensions Management Institute.
Aon Consulting, in its submission, has called for employers to be compelled to provide stakeholding pensions unless they offer an occupational scheme but this view clashes with that of the ACA.
The ACA restates its belief that as with a similar Australian reform, compulsion could damage the existing occupational sector. John Lappin"