Industry fails to reach consensus over PA charging structure

Personal Accounts Delivery Authority chairman Paul Myners said there is "no easy answer" to the problem.

PADA said it received more than 40 responses to the consultation. Respondents included industry bodies, pension scheme providers, consumer groups, employer groups and interested employers.

However, was no clear consensus view on the most appropriate charging structure for personal accounts. The majority of respondents were in favour of either an annual management charge only or a contribution charge with an AMC.

Respondents in favour of an AMC-only saw it as simple and transparent, which they felt would encourage participation in the scheme. Respondents in favour of a contribution charge with an AMC argued that it would be the most sustainable option, with the flexibility to deal with a range of business risks.

"The responses to this consultation show there is no easy answer. What is clear is that the charging structure will be a key design decision for the scheme. The choice of charging structure will have a direct effect on member outcomes. It will affect the viability and sustainability of the scheme and it may have an impact on participation in the scheme," Myners said.

Chief executive Tim Jones added: "Although there is no clear consensus about which charging structure would be best, there is agreement about the qualities the charging structure will need to help personal accounts succeed in its ultimate goal — that of achieving adequate retirement outcomes for more people.

"Our job now is to consider the options and issues further, taking into account the responses we have received, before providing recommendations, later this year, to the department for work and pensions."