Waterson said he would be sticking to Tim Jones and PADA ‘like glue’ to make sure they do not inherit a policy and project mired in spiralling costs and unresolvable difficulties. But he accepted there was a chance not all the problems could be resolved satisfactorily.
Waterson said: “Whoever is in government does not want a misselling scandal with people coming back saying we are worse off from this. This is why we were close to junking the consensus on this very issue. We are now in a process of looking at the at risk groups identified by the PPI and seeing how it can be addressed. But if you look at fiddling with the trivial commutation limits or pension income disregards you can find that you are increasing means testing. There may not even be a solution.”
Cazalet Consulting director Ned Cazalet said: “Adair Turner was talking about 0.3 per cent and now he is head of the FSA and advisers will know that about 18 months ago the FSA put out a briefing saying if you are dealing with people on low incomes and talking about pensions, be very careful. If this PADA scheme were run by an FSA-regulated body it would say that you can’t run a scheme where 30 per cent of members will derive no benefit from it.”
Jarrod Parker, employee benefits director at Alexander Forbes said: “Means testing remains a concern. For the first five or 10 years people will just commute benefits anyway.”
Helen White, assistant director of retirement policy at the ABI said: “We are concerned employers will change their pension offerings so employees get worse outcomes. They may adopt the qualifying earnings criteria for personal Accounts, which would mean low earners would get less as the first £5,000 of pay is not covered.”