Friends Provident: Red tape blights Personal Accounts progress

The current auto-enrolment proposals and the potential for leveling down spell further confusion for employers says Friends Provident.

Findings analysed in the wake of the Conservatives' pledge to retain Personal Accounts (should it win next year's general election) found that only 13% of employers are ready for Personal Accounts.

Friends Provident believes the current regulations for Personal Accounts, in particular the proposed criteria for existing schemes to opt out of the proposed framework, will not only make life unnecessarily complicated for employers but will also increase costs. Nearly half (44%) of those employers surveyed by Friends Provident do not know or are not sure what impact Personal Accounts will have on their existing pension arrangement.

In light of this, Friends Provident is calling for the auto-enrolment processes to be simplified so that come 2012; there is a system in place which is easy to administer and cost effective. The corporate pensions specialist believes that if the government seriously wants people to take responsibility for their own retirement needs then supporting current employer-sponsored provision instead of undermining it is a must.

Martin Palmer, head of corporate pensions marketing at Friends Provident said: "As originally conceived, Personal Accounts are a good attempt to deal with the issue of encouraging people on low to medium incomes, or those in transient or self-employment to save for retirement. Currently only 25% of people are saving enough for their retirement. We have time to make changes but it would be better to delay implementation and get it right, than stick to targets and be left with something in that isn't going to work - and actually will probably make things worse."