5 December 2005 - Timms issues challenge to pensions industry
Minister for Pensions Reform, Stephen Timms, today challenged the pensions industry to work up the details of an industry-led alternative model to Turner’s National Pensions Savings Scheme.
Speaking at the ABI Savers Summit in London, Mr Timms said that the Government welcomes the broad framework of the Pensions Commission’s proposals and options and that they are the right basis for the debate to come. But he said that there is much to be discussed and decided in relation to the detail of that framework – and one such area is the idea of personal accounts.
The pensions industry have broadly welcomed the principle of personal accounts, but questioned Turner’s preferred model of a National Pensions Saving Scheme. The ABI believes that – given a level playing field – it can put together an industry-led model which will do a better job than the model Turner proposed.
The Pensions Minister invited the industry to work up the details of an alternative approach by February.
Mr Timms said:
“Success in pension reform requires Government and industry to work in partnership with employers and employees. The voice of the industry has always been at the heart of our consultations on reform – and we need it to be at the heart of our response to Turner.”
“Today, I want to issue a challenge. I’m challenging you to work up the details of an alternative approach by February – and then as part of the National Pensions Debate I’m going to ask the ABI to host a joint event with Government in which you can come forward and present this alternative model.”
Mr Timms laid out the two principle criteria that any alternative model has to
meet. Firstly, a radical extension of coverage, including lower and moderate earners, the self-employed and those working for small employers. And secondly, a radical reduction in cost – both in terms of low management charges and reduced administration costs for business.
Mr Timms continued:
“If you can design a detailed, workable model that meets these criteria and can match the Turner version for a broadly comparable level of charging, then that will be very attractive to us in Government. The decision when we make it will be a pragmatic one. We are serious about building consensus, and we are in no doubt as to the potential attraction of an industry-led model. “
“But we also mean what we say about getting on with reform. The choice is over how we act – not whether or when. The pensions of tomorrow depend on the decisions people make to save today. So we must act quickly to develop the building blocks of a Government package which can be widely supported – which is why we will be coming forward with a White Paper in the Spring of next year.”
Notes to editors:
- Stephen Timms was speaking at the ABI Savers Summit in London. His speech is available at: http://www.dwp.gov.uk/aboutus/speechesindex2005.asp
- The Pensions Commission published their second report on 30 November 2005. It is available at http://www.pensionscommission.org.uk
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