Accusations that the National Pensions Saving Scheme (NPSS) proposed by the Pensions Commission is Stalinist are “absurd”, according to the commission’s chair.
Under the commission’s proposals for an NPSS, unveiled last November, employees would be automatically enrolled into a centrally-managed government scheme into which they would pay 4% of their salary, with employers contributing a further 3%.
Christine Farnish, chief executive of the National Association of Pension Funds (NAPF), which lobbies on behalf of the pensions industry, recently described the NPSS plan as a “monolithic quango” and a “throwback to the Stalinist era”. Employers’ groups have also criticised the compulsion element of the scheme. But Lord Turner said that the NPSS was based on personal ownership and personal choice.
“If that is Stalinist then economic historians have seriously overlooked Stalin’s support of individual property rights,” he told Personnel Today.
Will Hutton, chief executive of the Work Foundation, said the NPSS would operate in a similar way to the BBC – a publicly-funded body that is independent of the government – and the NAPF.
Turner said that a major selling point for the national savings scheme was the cost to investors. The approximate cost for earners investing in a stakeholder pension scheme at the moment is 1.3% of their investment, which Turner said could be cut to 0.3% under the NPSS.
The government will attempt to address business concerns about the proposed NPSS at a summit with representatives from the savings industry and employers’ groups on 28 February.
