UK - The Personal Accounts Delivery Authority (PADA) will launch a consultation on investment strategy in November with an ethical investment event and has also revealed further details about e-business future of its service.

Speaking at the National Association of Pension Funds (NAPF) annual conference, Tim Jones, chief executive of PADA, said the next stage of development by the body would be formal consultations on investment and decumulation strategy.

"The investment consultation will begin on 25 November with an ethical investment event, and in March/April we will publish a detailed consultation paper. The single most important debates will be responsible investing across the whole of the investment area, and the structure of the default fund."

In his presentation, Jones pointed out while a lifestyling approach to the default is currently popular in some schemes, the problem with this approach - particularly in tumultuous markets - he claimed is there is a risk volatility would be reported as wiping millions of pounds of value off personal accounts, which in turn could affect persistency.

He said the key question to be asked is "what price [should be paid] for mitigating volatility in the default fund," adding "that's what we want to get at in the consultation paper".

He also confirmed the paper would also focus on responsible investing including issues such as ethical investment and religious beliefs.

Jones said the consultation document on decumulation strategies will also be published by the end of the year, and will include a strategy on how to deal with stranded pension pots of between £2,000-£5,000, although he refused to elaborate on what the proposed solution would be.

The CEO of PADA confirmed it already has detailed plans in place for delivering personal accounts, and specified it will essentially be an e-business with a caseworker assigned on an individual basis for tackling issues, such as pension-sharing on divorce and death of pensioners, that are "ill-suited for e-delivery". 

He said there would be no joining pack for members, no paper opt-out form and no paper annual statement, so members will be required to access statements online in an effort to meet its public service obligation but keep costs down.

He admitted there may be a "small minority" of people who are uncomfortable with the electronic delivery of information, so one possible solution could be to use 'agents' who, with the member's consent, would interact with the system on their behalf and could be from an organisation, for example, such as the Citizen's Advice Bureau (CAB).

But as PADA is focusing on the delivery of the new system, Jones confirmed he intends to establish the corporate trustee body as soon as possible so the investment and decumulation work could be "pushed towards the trustee" as they are required to make the final decisions.

"It is unlikely that you will see personal accounts with 700 fund choices, instead it will be a well-thought out default fund and a small number of other fund choices."

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