Private sector to deliver NPSS – Hutton
UK - The new personal accounts (NPSS) to be outlined in next week's Pension Bill will be delivered by the private sector, says pensions secretary John Hutton.
"Private sector expertise will be crucial to the success of personal accounts - which is one reason why the new delivery authority is so important," Hutton said in a speech at the annual Savers Summit.
"And we envisage that personal accounts will be delivered by the private sector," Hutton said. He added that creating an opportunity for savers to choose management of their fund was "one of the principal responsibilities of the delivery authority".
Hutton also stressed that the new system is not designed to replace any existing employer schemes but to "fill a gap in the existing market".
He said: "Will the NPSS create a tidal wave of withdrawal from DC schemes - I think it is very unlikely.
"If companies want to pull out of any DC provisions because of economic circumstances they will do so with or without the NPSS. The new system will provide a floor below which people cannot go."
Asked whether he thought that the mandatory employer contribution of 3% was too low, Hutton said: "It would have been completely irresponsible to start the NPSS with a mandatory employer contribution of 7% or 8%. Employers have to have a guarantee that there will not be endless runaway costs."
Philip Hammond of the opposition Conservatives commented: "The cost of the employer contribution will eventually lead to a slightly lower wage increase over time. If it was otherwise it would undermine the competitiveness of the UK economy and the stability of the system would be eroded."
He thinks that in a few years time even employees might be against any increase in the mandatory employers rate as they see their wages being affected.
Another issue that was brought up at both conferences was the raising of the State Pension Age to 68 by 2046. Hutton stressed that it was important "to be straight with people on this crucial issue so they know where they stand and can plan accordingly". Liberal MP David Laws confirmed that this issue was "surprisingly uncontroversial" among the three major parties in parliament.