According to a report in the media, the insurance sector has rounded on UK Pensions Commission chairman Lord Turner's plans for a National Pension Savings Scheme (NPSS).
Speaking to the Reuters news agency, Jon French, a spokesman for the Association of British Insurers (ABI), claimed that the scheme’s annual management fee of 0.3% may prove tough to realize.
When you look at New Zealand, the US or Sweden, their schemes are running around 0.6% or 0.7%, Mr French told Reuters. Turner’s 0.3% is based on a load of assumptions that have not been fully worked through. So it’s fair to say that 0.3% is unrealistic.
The ABI is one of the bodies that has been approached by the government to devise alternative options for a new savings scheme. The ABI is reportedly set to reveal a ‘personal account’ option that workers will carry over from job to job. This idea envisages employers and employees making equal contributions, with anyone not included in a workplace scheme being automatically enrolled.
The ABI plans formally to reveal its proposals on February 10, 2006.
The ABI’s criticisms come only days after the chief executive of the National Association of Pension Funds described the planned NPSS as a ‘monolith’.