Newspaper article The Evening Standard (London, England)

Sandler's Simplification May Be No Solution on Saving

Newspaper article The Evening Standard (London, England)

Sandler's Simplification May Be No Solution on Saving

Article excerpt


THERE is a tendency in this country to deprecate institutions that may not be perfect but on balance do a tolerably good job, in the belief that they can be seamlessly replaced by something perfect copied from elsewhere.

It never works, of course. Instead we undermine, weaken and generally mess up what we have and then find that what we have imported is a disappointment.

Perhaps it is something to do with a lack of national self-confidence.

Perhaps it is a result of excessive Whitehall interference.

Either way, the commonsense view that a bad pension is better than no pension, and a poor with-profits endowment policy better than the interest rate from a building society is too politically incorrect these days to pass muster.

For some years the big insurers have been expanding overseas because they can no longer make decent profits here. The irony is that these companies, having had appalling management for decades, are now run by people who are rather good but they have been saddled by Government with the 1% charging regime for stakeholder pensions which acts as a price control across their whole product range, puts a fierce squeeze on margins and makes life very tough.

Yet next Tuesday the sector will face yet another challenge when Ron Sandler's long-awaited Treasury-commissioned report on the industry is published.

Much of what Sandler is likely to propose on simplifying with-profits policies, reducing charges and making the "smoothing" process more transparent and predictable is sensible, but it comes at a terrible time for an industry battling with falling stock markets and declining returns.

Whether it can change at the pace Sandler or the Government may demand is debatable, particularly as according to Michael Riley of Accenture the proposals could remove pound sterling1 billion of profit from the industry. …

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