The Association of British Insurers has presented its 'Partnership Pensions', its response to the challenge laid down by UK pensions minister John Hutton to come up with a viable alternative to the state scheme proposed by the Turner report last year.
Since suggesting a government-run ‘super scheme’ in his report published at the end of November 2005, Lord Turner has come in for sustained criticism from the private sector for offering unrealistic solutions to the UK’s pensions crisis.
Responding to the Turner proposals, pensions minister Mr Hutton challenged the private sector to offer a detailed and workable alternative system. Two months after the Turner report was published, the ABI has now put together its suggestion for how the private sector can overhaul the British pensions system.
According to the ABI, the ‘Partnership Pensions’ will have lower startup and running costs than the state scheme for at least the first ten years; introduce new portable personal accounts for employees, supported by auto-enrolment and employer contributions; and be governed by an economic regulator to keep charges, incentives and contribution levels under review.
Overall the ABI believes its proposal will be more cost effective, more accessible and simpler to understand and run.
Stephen Haddrill, the ABI’s director general, said: Partnership Pensions builds on the best features of the Pensions Commission’s proposal and existing private provision. We firmly believe that the private sector can deliver Adair Turner’s goals more effectively than the state.