UK Treasury promises new ‘stakeholder products’
UK - A new suite of ‘regulated stakeholder savings products’ is being promised by the Treasury in the UK. These will be based on the stakeholder pension plan introduced last year, probably with a similar cap on annual charges of 1%.
A price cap is essential, Treasury first secretary Ruth Kelly told the ‘Sandler seminar’ in London today, which convened to consider the recent report of the Sandler Committee into the UK savings market. The committee said the 1% limit is the right place to start and the government agreed with this, she said.
“Stakeholder products promise to make it easier for consumers to buy investments by giving them access to standardised, easily comparable products. That increased transparency will drive increased competition,” she said.
“Stakeholder pensions have already demonstrated that a regulated product with controls on charges drives down costs.” By reducing compliance costs a whole new market opened up to providers, Kelly claimed.
The aim was to shift the focus of regulation from the sales process towards the specification of the product. The Treasury would be working with the savings industry and consumer bodies to draw up product specifications.
“Employers have a role to play: helping their staff to find their own way to financial security,” Kelly said, adding that more could be done, particularly by small to medium-sized companies.
“One barrier we can eliminate straight away is the myth that giving information to staff brings employers within the scope of regulation. The Financial Services Authority has already issued a guide to employers who provide stakeholder pensions on this point.”
Kelly confirmed that the government will be publishing a green paper on pensions “soon”, adding: “The Inland Revenue will be completing work on the taxation of pensions.”
The government was pressing ahead on the European agenda, aiming to build a single European market, she also told the seminar.