The National Pensions Saving Scheme (NPSS) – which is favoured by the government to help solve the looming pensions crisis – could do “lethal damage” to existing pension funds, according to a pensions expert.
Alan Pickering, a senior consultant at Watson Wyatt and himself co-author of an earlier government-sponsored report on pensions, said that the Pensions Commission’s NPSS plan was the most unattractive recommendation in last year’s report.
The proposals would see employees who were not already covered by an occupational pensions scheme put in 5% of their earnings (1% being National Insurance tax relief) and employers contributing a further 3%.
Last week work and pensions minister, John Hutton, said that the government had not been convinced by the arguments made against the NPSS by other stakeholders such as the CBI and National Association of Pension Funds.
However, Pickering said the NPSS could stifle the diversity of pensions options that are presently open to employers and cause a “planning blight”.
“Traditional single employer-based schemes are definitely not past their sell-by date,” he said.