UK - Simplification will create a new landscape which will blur the line between pensions and employee benefits, administration software experts predict.
Aquila – and its wholly-owned subsidiary, Heywood – say the purity of a single regime and simple rules based on contributions and fund size “could genuinely create a single pensions market”.
But Aquila joint chief executive Finlay Ross says the ability to pay large amounts on contributions later in life will lead to a deferral of pensions savings for the better off.
He said: “This is likely to lead to some companies mixing short-term savings vehicles, such as ISAs, with longer-term pensions savings, as part of their employee benefit package, with a gradual shift from one to the other.”
Ross added: “The effect will be to blur the distinction between these different forms of savings.”
The software provider believes the next 12 months will be a watershed year within the occupational pensions industry.
Aquila said a single regime would give an opportunity for aggregation of deferred and frozen pensions.
“This would give significant cost savings and make it easier to manage an individual’s assets most efficiently. It would however mean a significant shift of assets among existing institutions, so will be resisted.”
Pension scheme contracts won by Aquila and Heywood in 2003 include the £12bn BP Pension Fund, the £2.3bn Imperial Tobacco Pension Fund, the £1.2bn Kvaerner Pension Fund, the £1.2bn Pilkington Superannuation Scheme and the Staffordshire Police Pension Fund.
Aquila has also been appointed as software provider to Invesco Pensions’ DC platform, to Hazell Carr for its TPA service and to manager-of-manager MLC for its MLC Personal Pension Plan.
Ross added: “The new clients we attracted in 2003 cover the whole spectrum of the pensions market, showing Aquila Group as the only company addressing the whole market.
“With the challenge of simplification on the horizon, we anticipate further wins during 2004.”
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Malcolm Mclean says getting the channels of communication right and engaging more openly is a good starting point