Two major bodies representing the UK insurance industry have come out with their views on how best to encourage greater retirement saving, in the wake of the publication of the Turner report.
The Association of British Insurers (ABI) is to unveil its own response to the Turner report by emphasizing that its own research suggests some of the assumptions Turner makes are unrealistic.
The body has again emphasized that it considers the 0.3% annual management charge put forward by Lord Turner for his National Pension Savings Scheme (NPSS) to be unrealistic, and advocates a more attainable level of 0.6-0.7%.
According to a report in the Independent newspaper, the ABI has used research from Deloitte to back up its claims. The body also wants to see government appoint a separate body to control the levels of charges applied to the national savings scheme in the long run.
The ABI believes a national system could still reduce the current cost of pension administration by as much as half, the body’s director general Stephen Haddrill told the Reuters news agency.
The system envisaged by the ABI would see workers use their banks to make payments into a pot that they would retain when they changed jobs, Mr Haddrill said in the report.
The ABI will elaborate upon its plans formally on February 10.
Meanwhile, the chief executive of the National Association of Pension Funds (NAPF), Christine Farnish, has written an article in the Financial Times giving further details of NAPF’s proposed ‘supertrusts’ option.
Collective trust-based defined-contributions schemes would be a good alternative to the NPSS. Such ‘supertrusts’ would be large-scale not-for-profit institutions, each with hundreds of employers automatically enrolling workers into them. They would be run by experts, with a governance structure designed to act in the interests of members, not providers.
Having several such institutions would encourage innovation and dynamism. Their performance on cost, investment returns, administration and member service would be transparent and comparable, helping to drive up performance, Ms Farnish wrote.