| Standard Life rides high on A-day savings |
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LONDON - The proposed pension reforms that are effective from April 6 next year came under a fresh round of fire after Standard Life reported that its new-style personal pension plans had netted over £1 billion as the mostly wealthy investors prepared to welcome the new scheme designed to simplify pension savings.
Critics have been vocal in stating that the proposed reforms are only a huge tax incentive to already rich people and would prove costly to the government, which already spends close to £11 billion encouraging people to save for their pensions. Industry experts say that the new scheme would only make the rich richer. They estimate that close to £12 billion could be put into this scheme by high earners and that this amount would mostly be invested in holiday homes and buy-to-let properties.
Pensions expert Ros Altmann, who had advised the government on framing policies for helping low-income pensioners said that even if she calculated on the lower end of the spectrum, the Treasury would still be poorer by £1 billion, "It has been clear for some time that these reforms would allow wealthy investors to make hay with their pension savings. Standard Life has made SIPPs [self-invested personal pensions] the centerpiece of its pension strategy, because it can see how much this offers people in future," she said adding that it was likely that the Treasury had underestimated the effect of the new scheme.
Standard Life said that it had made the pension plans its centerpiece since it believed that the demand for SIPPs is only bound to increase as April draws nearer, "The response has been beyond our wildest expectations ... The reaction from advisers and customers, many of whom have their eye on A-day, has been amazing," said Trevor Matthews Standard Life UK and pensions chief executive.
A-day is used to denote April 6,2006 when the new scheme comes into effect.
Posted
on : Tue, 20 Sep 2005 18:05 GMT | Investments News
By : Pippa Fielding
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