The new system of personal pensions accounts, which comes into force in 2012, will be administered by trustees.
As is the case with existing occupational pension schemes, the trustees will have legal obligations to handle the account scheme’s assets in the best interests of members.
In addition, Work and Pensions secretary John Hutton told a National Association of Pension Funds conference that a panel will be established to ensure that members’ views will be taken into account by the trustees.
He said: “Personal accounts will be the biggest step forward for workers seeking to build up a pension since National Insurance was introduced in the 1940s. But if we are to make them a success for the millions of people who currently aren’t saving for a pension, we must put in place measures to ensure they have the interests of future members at their heart.
“Protecting the interests of members underpins our decision to establish the scheme as a trust-based occupational pension. As such they will face the very same level of regulation as all other trust-based occupational schemes.
“A board of trustees will take ultimate responsibility for setting the strategic direction for the scheme from the collection of contributions to the investment of assets and payment of benefits. This will include deciding on the choice of funds and the strategy for the investment of the default fund; the appointment and management of external fund managers and ensuring that contributions are invested in the best interest of members.
“This will be important in ensuring that personal accounts deliver for our target group. As we emphasised in our personal accounts white paper, it is essential to the success of the scheme that members’ needs remain at the core of operational decision-making.”
Mr Hutton emphasised that personal accounts would be run independently of government, and that the scheme would remain focused on its target group of employees who did not have access to a good occupational pension scheme.
The aim of the scheme is to complement rather than compete with existing quality provision.
He added: “Our plan is to create a members’ panel along similar lines to the Thrift Savings Plan in the USA.
“The panel could nominate a proportion of the trustees and would be consulted by trustees on key decisions, providing them with access to the views of members, and a stronger sense of collective ownership.
“Given the scale of personal accounts, I believe such an approach could be absolutely critical to the success of the scheme and increasing confidence across the whole pensions industry.”
He also confirmed that the government will provide its response to the consultation on its white paper Personal accounts: a new way to save next month.
