Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at

Queen's Speech: Fidelity slams volume of pension legislation

by James Phillipps on Jun 04, 2014 at 14:40

James Jenkins, Standard Life head of workplace strategy, said: ‘We warmly welcomed the increased flexibility and choice for savings introduced in the Budget, however we believe the government could go further.

‘The three recommendations we are outlining today would further simplify the savings landscape while increasing the flexibility on offer to savers. We are calling on the government to review and consider all of our proposals.’

Is going Dutch the way forward?

David Smith, a wealth management director at Bestinvest, said that collective DC schemes are no silver bullet for pension savers and arguably run contrary to the aim of enabling individuals to have greater control of their funds at retirement.

‘Collective pension funds work by pooling all members pension contributions together and the scheme will employ one uniform investment strategy, which is in direct contrast to UK pension schemes where members invariably select their own individual investment strategy,’ he said.

‘They will also physically pay out an individuals’ retirement income directly from the fund, thus avoiding the costs associated with annuity purchase, with pension income levels being calculated by a scheme actuary with the aim of providing a level, or ideally increasing, income in retirement."

While the theory may appear sound on paper, they are not without problems, particularly in a market such as the UK.

Smith said: ‘For collective pension schemes to work effectively you need economies of scale, as the more monies that are invested, the lower the associated charges will be and therefore the higher pension incomes will be. However, the UK pension market is already extraordinarily fragmented and as a result, it is highly unlikely that such schemes will establish sufficient critical masse to work as well as they theoretically could.

He added: ‘Maybe if such schemes had been made available as part of the role out of workplace pensions and as an alternative to Nest the concept would have stood chance? However, launching such a vehicle after all the many thousands of employers in the UK have gone through the costs and administrative burden of bringing in a workplace pension, is dumbfounding.’

‘Perversely, it is rumoured that due to a number of such schemes performing poorly in the Netherlands, serious consideration is being given to ditching these collective pensions and employing the UK individual pension model. All in all, this is double-dutch to me.’

Sign in / register to view full article on one page

1 comment so far. Why not have your say?


Jun 04, 2014 at 17:38

Collective pension makes the fund managers more accountable, I was given a glimpse of how the trustees tabling their questions on monthly reports, with lawyers and accountants on standby should there be any hint of doubt. JF, Invesco and Schroder were selected as a mix of risk, growth and conserservatism and they performed well for that particular critical mass of pension. The key to their success was the discipline imposed by the trustees.

Annuity purchase is for the whole retirement life, what is quoted is what you get, less hassle for the individual but is it the kind of deal all pensionera would be happy with.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home

As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Investing for income in a changing environment

With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:


On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet