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The Personal Accounts Delivery Authority launches its Decumulation Consultation
Today, the Personal Accounts Delivery Authority (PADA) launched its consultation on decumulation, Securing a retirement income. PADA is considering the options for helping members of personal accounts get a good deal when they retire and is seeking views to inform its approach.
The consultation covers:
* securing a retirement income;
* choosing, buying and provision of annuities; and
* the possibility of taking some small pension pots as a lump sum.
The personal accounts scheme will not provide annuities for members, but intends to ensure that its members have clear information about the decisions they need to make, and how they can buy one.
PADA is proposing that the personal accounts scheme will design a largely self-service process to help members decide which retirement product will suit their specific needs.
As well as informing members about the open market option (OMO), PADA is proposing that personal accounts members have access to a panel of providers, who agree to meet certain conditions set by the scheme. This will simplify the buying process for personal accounts members, who do not choose the OMO.
PADA expects that the provider panel will be able to cater for smaller sums to avoid the potential for "stranded pots" and to be as competitive as products on the open market.
PADA is seeking views on the workings of the provider panel, in addition to other potential arrangements. Comments are also invited on potential alternatives to e-business for communication with personal accounts members about their relevant options.
Chief executive, Tim Jones, said:
"We expect that many personal accounts members will have a limited understanding of financial products and, in particular, how to buy an annuity.
"We want to come up with the best possible solutions for members of personal accounts, so that they get a good retirement income. The options need to be easy to understand and take into account that many pension pots will be relatively small on maturity, particularly in the early years of the scheme.
"We believe we have come up with a number of interesting proposals to help us tackle the challenges the personal accounts scheme will face. However, we are really keen for everyone with expertise and an interest in this area to come forward with their ideas and views and, importantly, the evidence to support them."
Acting Chair, Jeannie Drake said:
"Turning pension savings into retirement income is one of the most important financial decisions an individual can make.
"The personal accounts scheme will build on current best practice in the market to help members make the right choices."
PADA expects to publish a summary of responses by 4 June 2009.
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Notes to editors:
1. The Personal Accounts Delivery Authority (PADA) is a non-departmental public body specifically established by legislation to introduce the personal accounts scheme.
2. The personal accounts scheme will be a trust-based occupational pension scheme, run by a Trustee Corporation. It is intended to complement existing workplace pension provision.
3. A transitory body, PADA will cease to be operational once the scheme is up and running - the personal accounts scheme will be managed by a Trustee Corporation.
4. The full consultation paper will be available to download from PADA's website on 2 December: http://www.padeliveryauthority.org.uk
St. Dunstan's House, 201 - 211 Borough High Street, London
t 020 7940 8582 f 020 7940 8573 e PADA.MEDIA @dwp.gsi.gov.uk