PIMA welcomes Sir Malcolm Rifkind’s ‘Rights of Savers’ Bill
PIMA welcomes today’s debate on Sir Malcolm Rifkind’s ‘Rights of Savers’ Private Members Bill. If enacted, PIMA believes that this bill would provide a tremendous stimulus to savings in the UK.
An important provision of Sir Malcolm’s Bill is the SaRA (Savings and Retirement Account)—an idea long promoted by PIMA. The SaRA has the tax treatment of a pension with the functionality of an ISA. The tax preferred ‘wrapper’ can accommodate any FSA-authorised investment.
This will permit long-term and retirement savings that fit modern lifestyles (e.g. career and job changes, time out of work, etc.)
There are a host of aspects that make this type of scheme superior to existing conventional pension schemes.
• Firstly, the SaRA is very flexible. Because SaRA is ‘saver-centric’, employees have the same account regardless of switches in jobs and their employment status. Additionally, because savers pick individual investments in the wrapper on an ongoing basis, they are able to align their investment choices with their appetite for risk and return. Additionally, if a saver feels that they aren’t getting value for money or the best deal, the SaRA allows them to easily switch providers—a real contrast to personal, stakeholder or occupational pensions.
• Secondly, the SaRA is transparent. Customers can obtain a much clearer idea of the value of their investments at any given time, simply by using quoted prices in major media or by phoning their provider. Also, the structure of the SaRA allows customers know their yearly investment returns as well as knowing how much they are paying for the services of their investment provider.
• Thirdly, the SaRA is efficient. Because the very structure of the SaRA accounts are ‘saver-centric’, they eliminate the need to use trustees and burdensome administration. This drives down costs of providing the product while simultaneously promoting a more competitive marketplace. More competition will have the effect of driving down costs even further while encouraging providers to deliver better returns.
• Fourthly, the SaRA is simple. Since SaRA uses the same concept as the ISA and CTF, millions of customers will already have a good understanding of the product structure. The SaRA builds on the simplicity of the ISA—a product that has attracted 16 million savers investing £180 bn.
PIMA Director General, Tony Vine-Lott said,
‘PIMA believes that the introduction of SaRA in the Rights of Savers Bill introduced to the House of Commons today by Sir Malcolm Rifkind QC MP would be a boost for savers in this country.
The SaRA would result in the development of a range of pension products that would be a lot more attractive to the general public than the current schemes – being far more transparent, cheaper, flexible in terms of investment choice and easier to transfer to different providers. All of which should be good news for the consumer.’
For more information and comment:
Tony Vine-Lott, PIMA
07790 006108
Iain Anderson, Cicero Consulting
020 7665 9532
077 8550 7045
Jacob Coy, Cicero Consulting
020 7665 9535
078 8619 7086