UK life insurer Standard Life has reportedly submitted evidence to the Treasury select committee suggesting that the proposed national pensions saving scheme (NPSS) could take three decades to overcome initial losses.
IFA Online reports details of the firm’s submission to the select committee, which argues that NPSS is likely to cost some GBP3.5 billion to get off the ground.
Standard Life also believes that it could cost more for NPSS to be run by the private sector than by the state, because were an NPSS-style system to be administered privately, it would need reserves of capital to maintain solvency margins. In addition, the cost of capital outlay to establish the scheme would be higher for the private sector than it is for the government.
One of the stumbling blocks often highlighted by critics of NPSS is the proposed 0.3% annual management charge for savers, with many observers criticizing this fee as far too low to be sustainable.