UK - Plans to introduce a national pensions savings scheme could have knock-on effects for existing pension fund trustees, a conference was told today.
"The NPSS will have a real effect on us," said Andy Street, director of personnel at retailer John Lewis Partnership, said at the event organised by Tomorrow's Company. "Our share of the £2bn would be around £8m in additional costs."
He wondered about the impact on current contributory schemes. "It shouldn't be necessary to have a compulsion, allow companies to do the right thing." He said that trustees might think it is best to close down schemes with the introduction of the NPSS.
The NPSS is one of the ideas currently being studied by the government.
Meanwhile, the financial regulator the Financial Services Authority has warned that a "robust" regime would be needed for the new personal accounts arrangement.
The "failure of a Personal Account provider firm would affect our market confidence objective - the failure of a firm with wide coverage could clearly ripple through to confidence in other provider firms and to the market as a whole. We therefore believe it is important to have a robust prudential regime in place."
It feared "unsuitable products" could be offered to consumers and that "inappropriate practices" could emerge.
And the Faculty of Actuaries has also weighed in, saying the government's White Paper proposals fail to offer security in retirement.
It said: "Security in retirement will become a fantasy for many people if they are forced into means tested benefits because their state pension is too low."
Faculty president Stewart Ritchie added: ""We accept that, because people are living so much longer, affordability means that some of the extra years need to be spent in work.
"But the degree of means-testing remains a major problem with the Government's proposals. Auto-enrolment for many lower earners may simply mean that private pension replaces mean-tested pension, and several million such employees may have little extra to show for the Personal Account contributions of themselves and their employers.
"Combining this with the absence of advice could be an explosive mix, leading to a breakdown of trust."
National Association of Pension Funds chief executive Christine Farnish, speaking at the Tomorrow's Company event, reiterated her personal concern about auto-enrolment.
She said: "These are an untried and untested ideas, certainly here, but also in other countries.
"The whole system builds on consumer inertia, but these ideas have only been around since November 30 last year. It is a very hasty programme, also in view of the lack of research."
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