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‘Dutch-style’ group pensions to be unveiled in Queen’s Speech

Your Money
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Your Money
Posted:
Updated:
02/06/2014

Workers are to be given the option of saving into new ‘collective’ pension schemes which ministers believe could boost their incomes by up to 30 per cent.

Under the plans set to be unveiled in the Queen’s Speech later this week, a worker’s savings would be pooled with those of thousands of others, rather than being run individually, and smooth the risk to employers of running multiple pensions.

Supporters of the move claim the lower costs associated with running funds collectively will mean retirees will receive larger incomes.

The changes are set to be announced in the Queen’s Speech on Wednesday, and may be introduced in 2016, according to multiple reports.

However, the Financial Times reports pensions minister Steve Webb has shelved plans to give employers more powers to change the terms of defined benefit schemes.

Webb has about-turned on his proposals on salary-linked pensions because companies indicated they would not take them up, the paper reported late on Sunday.

On plans for collective workplace pensions,Webb told the Sunday Telegraph they give people “greater certainty and probably better value.”

“There are some quite strong claims made for how much better it is. People say you will get a 30 per cent bigger pension.

“You might, you might not, but clearly it is pretty unambiguous that you will get a more certain outcome and potentially a better one.”

But others, including independent pensions expert Ros Altmann, warned against “over-optimistic claims” on collective defined contribution schemes, particularly as they are exposed to both market and actuarial risks.


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