CRA Insights

Competition in personal accounts

November 12, 2006

CRA has published two reports commissioned by the Department for Work and Pensions on competition and choice in personal accounts.
Competition in Personal Accounts compares the two alternatives for personal accounts put forward in the White Paper published in May 2006. One of the key differences between the two models is whether customer administration should be centralized or offered by competing providers. The report finds that the justification for centralization is weak since there is no apparent market failure and neither is there evidence of economies of scale continuing to the extent of needing a single provider. The report also examines the role of the default fund, the use of a limited panel of providers, the impact of price constraints and the interaction between personal accounts and other markets.

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