The government has given pensions providers until February to come up with an alternative model to Lord Turner’s suggested National Pensions Savings Scheme (NPSS), after industry experts claimed that implementing the plan could lead to thousands of job cuts.
The financial services industry reacted angrily to the Pensions Commission’s report after it recommended all employers should be forced to pay into staff pensions, which would be managed by government-appointed brokers.
Professional services firm Deloitte estimated that the scheme would lead to 50,000 financial staff losing their jobs as providers would have no role in administering Turner’s new system. Group pensions currently account for 25-30% of pension providers’ revenue, according to Deloitte.
Mark FitzPatrick, head of the insurance practice at Deloitte, said the life and pensions industry had the expertise and infrastructure in place to effectively administer the programme and enable the government to introduce the NPSS much more quickly.
The Association of British Insurers (ABI) said it could put together an industry-led model that would do a better job than the model proposed by Turner.
Stephen Timms, minister for pensions reform, said the insurance industry had until February to come up with an alternative solution.
“As part of the national pensions debate, I’m going to ask the ABI to host a joint event with the government in which you can come forward and present this alternative model,” he said.
Timms said any alternative would have to propose a radical extension of coverage, including lower and moderate earners, the self-employed and those working for small employers.
He also called for a radical reduction in cost, both in terms of low management charges and reduced administration costs for business.
For the CBI’s reaction to the Turner Report click here