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HM Treasury News Release 127/99 2 August 1999 POOLED PENSIONS INVESTMENTS LAUNCH IN 2001
Pension savers will be able to use pooled pension investments (ppis)
to invest in stakeholder pensions from April 2001, Economic Secretary
Melanie Johnson announced today. Ppis will allow pension schemes to invest in pooled funds more easily.
They will be good for personal pensions, occupational pensions and
additional voluntary contributions (AVCs), but are particularly suitable
for investors on modest incomes who will often find stakeholder pensions
suitable for their needs. Announcing the launch date, Ms Johnson said: "Both industry and consumer groups have welcomed Government proposals
for ppis as a straightforward, flexible and transparent way of investing
in pensions. They will make pooled funds an accessible and practical
alternative for all defined contribution schemes. "But they are likely to be especially useful for stakeholder pensions.
Consequently, and considering that many providers dealing with Year
2000 compliance will be introducing change freezes around the millennium
period, we think it sensible to introduce ppis alongside stakeholder
pensions in April 2001." Ms Johnson also announced that authorised unit trusts, open-ended
investment companies, certain investment trusts and single gilts would
all qualify for inclusion in ppis, saying: "I want to ensure that ppis offer investors the sort of protection
against investment risk appropriate for those on modest incomes. But
it is important to allow sufficient breadth of investment to accommodate
changing needs as people age, and to allow room for choice and innovation.
"That is why, for example, I have decided to restrict investment
trusts to those where the assets are held by an independent custodian,
at arms length from the fund manager, and those with borrowing at
or below 50% of net asset value. This range of investments will ensure
that ppis strike a good balance between investment risk and investment
growth." Today's announcement follows the joint Treasury and DSS consultation
paper Helping to deliver stakeholder pensions : flexibility in
pension investment, published in February 1999. Ms Johnson said:
"Ppis are an excellent example of our joint working practice. The
concept that we developed into ppis was first proposed while Alistair
Darling was Chief Secretary to the Treasury, and he has been keen
to secure the benefits that they offer alongside the stakeholder pensions
which he has developed as Secretary of State for Social Security."
The Secretary of State for Social Security, Alistair Darling, today
also announced further proposals for stakeholder pensions schemes.
NOTES FOR EDITORS 1. The joint consultation paper Helping to deliver
stakeholder pensions : flexibility in pension investment was
published on 3 February (joint HMT and DSS press release 24/99).
The consultation period closed on 31 March. Some 95 responses were
sent to the Treasury. 2. The paper asked four questions:
Responses overwhelmingly supported the concept of pension investment
in pooled funds. They broadly proposed the range of investments listed
above. Responses were evenly divided between those who advocated immediate
introduction and those preferring introduction alongside stakeholder
pensions. 3. Although most responses recommended that a non-trust alternative
governance structure for stakeholder pensions using ppis ought to
be developed, few practical suggestions were forthcoming. The Treasury
and DSS are considering how to take this further. 4. Media enquiries about ppis should be addressed to Charles Keseru
at the Treasury press office 0171 270 5188. 5. Stakeholder pensions will be introduced by the DSS Welfare Reform
Bill. For further information about stakeholder pensions phone the
DSS press office on 0171 238 0757. 6. If you have access to the Internet, you can find this news release and other Treasury information at www.hm-treasury.gov.uk |
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