Clause 1 - Meaning of “Savings and Retirement Account (SaRA) schemes”

Part of Rights of Savers Bill – in a Public Bill Committee am 2:45 pm ar 14 Rhagfyr 2005.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Stephen Timms Stephen Timms The Minister of State, Department for Work and Pensions 2:45, 14 Rhagfyr 2005

I am grateful for that answer but do not share the right hon. and learned Gentleman’s confidence, because the introduction of the stakeholder pension charge cap significantly reduced charging for personal pensions across the board. They fell by about a third between 1999 and 2001 following the requirement that an adviser recommending a personal pension should explain in writing to the customer why the pension recommended is at least as suitable as a stakeholder pension.

Of course, the account that the right hon. and learned Gentleman proposes is significantly more complex, in management terms, than a stakeholder pension because it allows people to take out and borrow some savings in the account for specified purposes. I do not say that one should, on that basis, argue against the flexibility for which he argues. Indeed, that is one of the more interesting features of his proposal. However, I suggest that if it were to go forward, its cost might well be somewhat higher than those of products that are currently available. That would be a move in the opposite direction to the one that the Turner commission recommends.

There are several other points that one could make, but I shall say no more at this stage, other than to welcome the fact that the right hon. and learned Gentleman has done the House a service in advancing a new idea that gives us something else to have on the table as we debate the matter in the next few months. For the reasons that I gave, it would not be right to proceed with that idea at this stage, but it is an interesting proposition, and I welcome the fact that it has been brought before the House.