In a consultation paper the Government today published more details of the pension savings vehicle formerly known as the pooled pension investment. Although for political reasons billed as a joint announcement by the Treasury and the DSS, callers to the DSS public enquiry and press offices are being redirected to the Treasury.

The IPA will be very like an ISA or PEP, and also owes a lot to the US 401k plan (although “of course” access to the IPA fund before retirement has been ruled out). Advantages are said to include a simple charging structure, spread investment risk, security, transparency, and better understanding and confidence in equity investment. IPA savers are expected to enjoy a sense of ownership unavailable in many other vehicles, and in many cases a degree of control. The legal owner of the IPA assets will be the trustees or manager of the approved pension scheme to which the individual belongs. The IPA manager will very often also manage the pension scheme. The IPA will be able to operate within any kind of DC scheme (especially stakeholder), but it seems unlikely to fit with a DB scheme.

The accompanying press release claims IPA savers will be able to achieve increases of 30% in their retirement fund. Three examples are given, all including a career break to care for family members, where the combined funds from a mix of occupational and personal schemes is compared with the result from using an IPA. All necessary assumptions are left unstated; nor is any evidence offered to explain how the public sector defined benefit schemes to which at least two (a teacher and a care assistant) would almost certainly belong would incorporate the IPA.

In comparison with funds offered by existing types of DC scheme, then, how will this extra sense of ownership and control be realised? Partly, it is claimed, via cheaper and easier transferability of the assets (chiefly, units; the PPI/IPA initiative has after all been urged along by the unit trust industry), from the original IPA to a new IPA run within the new scheme. With the possible exception of transfers between stakeholder schemes, which must be free of charges, this is hard to see. The scenario wherein the individual can simply transfer the contents of the original chosen IPA and carry on contributing as before (without any constraints imposed on investment choice by the IPA manager) seems unlikely. One of the consultation questions posed is “On what terms do potential IPA providers want to give and accept transfers of IPA investments?”