UK - The Personal Accounts Delivery Authority (PADA) has already spent more than half of the first capital injection of £3.3m (€4.07m) provided by the government on staff costs and administration.

PADA was established on 26 July 2007 and the non-departmental public body has published its first annual report and accounts covering the eight-month period until 31 March 2008.

However, until the body was given 'grant-in-aid' status on 1 March 2008, the Department for Work and Pensions (DWP) covered the costs for work undertaken by the authority.

Figures in this first set of annual accounts therefore only cover the period between 1 March and 31 March, when PADA was required to take responsibility for its own financial reporting, although the costs relating to the chair, chief executive and non-executive directors of PADA since their appointments have been included.

This means over the eight months since its establishment PADA has incurred staff and administration costs of £1.992m, even though only two full-time members of staff have been appointed, as the majority of the remaining 116 employees are technically seconded from other government departments or employed on an interim basis.

Figures from PADA's balance sheet showed at the end of March the organisation had spent £1.074m on employment costs and a further £922m on other administration costs, leaving PADA with £1.308m from the initial £3.3m 'capital injection' made by the DWP.

Going forward, the authority - which will advise the government and design and establish the personal accounts scheme - will continue to be financed by "future supply" from the DWP, with the amounts of money approved annually by Parliament.

Once it is up and running, PADA said, the personal accounts scheme itself will be expected to be self-financing in the long-term, with between four and seven million members and £200bn of assets by 2040.
 
That said, the report confirmed there are some risks in establishing the personal accounts regime by the planned start date of 2012, which is intended to coincide with the introduction of auto-enrolment.

It revealed a review undertaken by the chief executive Tim Jones, when he joined PADA, "demonstrated that implementation from 2012 is achievable, but there are risks associated with this start date".

For example, it warned, "at this early stage in the delivery of a major project of this scale, innovation and complexity, a certain amount of risk and uncertainty is inevitable. We are confident, however, that we can deliver a new pension scheme in time to support the introduction of automatic enrolment".

As part of its intention to deliver the personal accounts scheme on time, PADA confirmed the next public consultation on the investment functions of the scheme - including the design of the default fund, lifecycle asset allocation, governance and socially responsible investment - would begin with an event on 25 November 2008. (See earlier IPE article: PADA reveals more on personal accounts future)

PADA also claimed a consultation paper on decumulation options for personal account savings will be issued later this year, the results of which will feed into a joint consultation with the DWP on the scheme order and rules of personal accounts to be published in "early 2009".

In the meantime, PADA revealed it also plans to undertake two "key pieces of research" - the Member insight and segmentation research and Employer insight and segmentation research.

It claimed the member research is deigned to understand attitudes to retirement saving to help develop a communications and marketing strategy, while the employer research will be used to inform the design of the scheme, plans for implementation and any relevant marketing.

Jones said: "I believe that we have built a strong base in the past year. The challenge will be to build on this, and to take forward the introduction of personal accounts in time for the onset of employer duties in 2012."

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