There was some modest consensus among speakers at the UK pensions summit held in London on February 28, though debate continues to rage over the relative merits of the national pensions savings scheme (NPSS) advocated by Lord Turner.
Both the government, in the person of pensions minister John Hutton, and several insurance sector representatives argued that the need to encourage Britons to save for retirement was the key aim of the reforms, and should be viewed as a priority.
Much of the debate in the wake of the publications of the Turner report has focused on the detailed issue such as the likely management fees any new compulsory savings scheme would entail.
People are not saving enough for their retirement and it is crucial that any future reform tackles this effectively. If we expect people to save more for their retirement we need to help them to do this with confidence, Mr Hutton said.
The Pensions Commission’s recommendations have already succeeded in moving the debate forward about charges on pension saving. Enhancing the value of pension saving by reducing charges is one way of improving confidence, the minister added.
Meanwhile, Dick Saunders of the Investment Managers’ Association concurred that the administrative costs of the scheme – whether NPSS or a private sector-led alternative – should not detract from the bigger picture:
Costs are not the issue – it is about getting the investment strategy right, in particular clarifying overall investment objectives and matching growth of average earnings, he was quoted as saying by Reuters.
Lord Turner also took the opportunity to defend his NPSS idea, arguing that the multi-provider options proposed by private sector bodies such as the Association of British Insurers risk a mis-selling scandal. Consumers may begin to question the system if one fund or trust provides higher returns than another, he is reported as saying by IFA Online.