Press Release

PERSONAL ACCOUNT CHARGES MUST BE CLEAR AND TRANSPARENT

24 April 2008

Responding to the Personal Accounts Delivery Authority’s (PADA) consultation, ‘Building personal accounts: choosing a charging structure’, the Investment Management Association (IMA) is calling for a structure based on an annual management charge (AMC).  This is a fair and transparent charge which will help to encourage individuals to remain in the scheme.  IMA believes using only a “contribution charge” should not be considered further because of the risks it poses for both scheme members and the financing of personal accounts. 

An AMC structure also has the key advantage of being compatible with existing commercial practices and would benefit employers and scheme members by providing maximum transparency and comparability.

Commenting, Richard Saunders, Chief Executive at the IMA, said:

“Given the public scrutiny that Personal Accounts are likely to come under, any charging formula that appears unfair to consumers could damage perceptions of the Personal Accounts scheme. It is therefore essential that the charging structure is fair, simple and transparent, while also being readily comparable with commercial products and schemes.  This is why an annual management charge structure is the best option.”

A copy of IMA’s response can be viewed here.