Lord Turner’s proposals to solve the UK’s looming pensions crisis is a “throwback to the Stalinist era”, according to the head of the UK’s pension fund lobby.
Christine Farnish, chief executive of the National Association of Pension Funds (NAPF), told the Guardian that Turner’s proposal for a National Pensions Saving Scheme (NPSS) was a “monolithic quango”.
Under recommendations made by the Pensions Commission last year, the NPSS would create a universal pensions scheme into which employees would pay 4% of their salaries and employers would have to pay 1%. A further 1% would be added by the government.
A recent survey of almost 800 employees, carried out by pollsters TNS for employee benefits firm B&CE Benefit Schemes, found 62% of the public are in favour of automatic enrolment in employer pension schemes, with only 15% against.
However, Farnish is cynical of the scheme, saying: “I wonder whether the real plot wasn’t to try and provoke the industry to come up with something better.”
She is also concerned the NPSS would encourage employers to put in the minimum possible amount under the scheme.
She said that the NAPF was also worried a single scheme would not be able to do the best deals in the market with fund managers or ensure they followed appropriate strategies.
“If Turner thinks one institution can do all that and put all that power into one organisation on behalf of 15-20 million people, it is a tall order. It’s a bit scary,” she said.
The NAPF will put forward its recommendations at the end of February, which reports say will centre on the creation of “super-trusts” managed by pensions professionals.
Employees would be able to pick the trust of their choice under the NAPF scheme.