UK - The UK government faces a mis-selling scandal if it does not reform the state pension, alongside reforms that will see the introduction of auto-enrolment and the National Employment Savings Trust (NEST), the National Association of Pension Funds' (NAPF) chairman has warned.

Speaking at the organisation's annual chairman's dinner, Lindsay Tomlinson said that without a reform of the state pension, members enrolled in NEST would end up not receiving means-tested benefits, leaving them with less money at retirement.

"Unless it tackles the means-testing trap, the government faces a major mis-selling scandal," Tomlinson said.

"This will materialise a few years down the track, when a large number of people discover that being auto-enrolled into NEST has merely resulted in a reduction in means-tested benefits they would have received if they had opted out."

He said the issue of means-tested benefits was a significant problem being stored up, urging instead the introduction of a state pension of £140 a week.

Tomlinson went on to criticise the role of the Pensions Regulator (TPR), saying it had been tasked with overseeing the extinction and rebirth of the pension system.

He praised efforts by the regulator to promote good-quality administration, as well as its role in ensuring that benefit guarantees were upheld.

However, he warned that these objectives were "not balanced by any requirement to maintain benefit levels" going forward.

He added: "If you give an effective set of people the kind of objectives that the Pensions Regulator has been set, the end results are predictable."

He said former TPR chairman David Norgrove had acknowledged that there was an endgame for defined benefit schemes.

"We will go down the extinction and rebirth route," Tomlinson added.

The chairman went on to say that reforms currently being muted for the public sector could potentially be transferred to private sector schemes, once implemented, allowing both sectors to coexist in harmony.

Praising Lord Hutton's involvement in the system's review, he said the former Department for Work and Pensions minister had produced a measured initial report.

"A reformed set of public sector pension schemes could be a template for future private sector provision, in the same way that final salary plans were copied from the public sector in the early part of the last century," he said.

In other news, Capita Business Services has been awarded a seven-year contract to administer the Teachers' Pension Scheme (TPS).

The £80m deal will see Capita continue its involvement with TPS through at least September 2018, meaning it will have administered the scheme for 22 years.

The agreement also allows for a further three-year extension of the contract, should the Department of Education choose to do so.

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