UK - Personal accounts will begin its roll out in the second quarter of 2011 to a small number of volunteers, according to the Personal Accounts Delivery Authority (PADA).
Although employer duties, such as compulsory contributions and auto-enrolment, do not officially come into force until 2012, Tim Jones, chief executive of PADA, today said the new pension scheme would be launched "at low volume" in the first part of 2011 as "there is no substitute for putting a thing out with real customers to see what happens".
Jones pointed out it is "relatively unusual and novel to be launching an e-enterprise pension scheme" so suggested the early launch with a small number of businesses would allow PADA to see "what works and what doesn't".
PADA confirmed in the scheme order and rules consultation, launched last month, that it wanted to set up the new system ahead of the start of auto-enrolment to allow it to test out the majority of the adminstration processes. (See earlier IPE article: Personal accounts to rollout ahead of auto-enrolment)
But Jones revealed the first wave of personal accounts would be launched with volunteers and confirmed PADA had already received expressions of interest from some businesses, while all the suppliers currently tendering for the administration contracts have all agreed a 2011 roll-out would be "credible".
"By the time the employer duties kick in formally in 2012, essentially we will already be a year old," said Jones.
That said, following the release of the discussion paper on investment strategy yesterday, PADA also confirmed the trustee corporation, who will be responsible for the final decisions, will not be formed until 2010.
However, as the corporation will "need to make decisions very quickly" once it has been formed, they will have access to some kind of 'data room' from "quite early in 2010", allowing them to see advice and recommendation documents from PADA ahead of the decision-making process.
PADA also said the final investment strategy for the scheme would have to consider whether investment returns or persistency should be the most important goal, as a default fund seen as too high risk, or even too conservative, could cause people to opt out.
Mark Fawcett, investment director at PADA, pointed out that the delivery authority is aiming to design a default fund which could be people's first choice rather than last, so even if people actively engage with the funds available - anticipated to be around 10 - they would not want to move away from the default.
In contrast, Jones said evidence suggests the level of interaction by members of a pension scheme during the accumulation phase is low so PADA needs to "recognise that reality" when engaging with members and communicating scheme information, including the possible use of mobile phones and more frequent pension statements over the year.
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