Scottish Widows supports Government's decision on Personal Accounts

Scottish Widows has welcomed the Government's response to submissions made on the White Paper on Personal Accounts. The Government has announced that the yearly limit on Personal Account contributions will be £3,600 with indexation to 2012 rather than the £5,000 previously proposed, and that there will be no Government subsidy of the new scheme.

Responding to the announcement Ian Naismith, Head of Pensions Market Development, Scottish Widows said: "Personal Accounts can be a major step forward in improving pension provision for those who currently lose out. We are delighted that the Government has responded to our concerns about the possibility that there could have been a serious adverse effect on good existing employer provision. This announcement shows the benefit of companies like Scottish Widows engaging positively with the Government to achieve the best result for everyone.

"It is essential that Personal Accounts are focussed on the target market of those who currently have no pension provision. If they are largely used by employers with existing good provision it could be detrimental to staff because many employers might well level down contributions to the minimum 3%. The maximum yearly contribution is a key element of the targeting, and while we would have preferred the £3,000 limit originally proposed by the Pensions Commission the Government appears to have struck a good compromise with its new proposals.

"We need more information before we can comment in detail on the proposed facility for lump sum contributions, but agree that some flexibility is desirable. However, it is important that the cost of that flexibility is fully understood before any decision is made.

"We also welcome the acknowledgement that Personal Accounts must be viable in their own right, with no possibility of Government subsidy. The pensions industry will continue to offer high-quality provision alongside Personal Accounts and it is essential that there is a level playing field for all types of pension.

We believe that Personal Accounts have an important part to play alongside existing private provision and state pensions. We are pleased that our concerns and representations have been taken into account in the Government's decisions."