Savings industry experts concerned over state's track
record with massive IT projects.
The government should not attempt to build the systems to underpin
a proposed new national pensions scheme, financial services
organisations have warned. Based on its past record, experts are
concerned about Whitehall's ability to deliver such a large and
complex scheme.
The National Pension Savings Scheme (NPSS) was proposed by Lord
Turner in a report from the Pensions Commission last week.
It recommended creating a national pension scheme built around
two IT-dependent government operations: a pension collection
system, into which all employer and staff contributions would pass;
and the NPSS system itself, which would distribute the funds
collected among fund managers and manage the individual pension
accounts created.
Helen McCarthy, head of pensions and savings at the Association
of British Insurers, warned that the government was ill-equipped to
manage such a project.
"It is an enormous project and we all know the government does
not have the greatest track record with IT projects," she said.
"The alternative is to use the industry's existing IT
infrastructure. The pensions industry has years of experience in
running pension schemes."
Leading insurers also expressed concerns. Standard Life chief
executive Trevor Matthew said, "By using its existing IT
infrastructure, the savings industry should be able to deliver the
NPSS more efficiently and cost effectively than a state
scheme."
Gary Withers, chief executive of Norwich Union Life, said he
would have doubts about the efficiency and quality of a state-run
national pensions payment system. "There is a track record of the
private sector being a more effective operator of such systems," he
said.
The Turner Report called for a scheme that provides employees
with electronic data feeds from their individual savings accounts.
The proposed data feeds would include real-time valuations,
transaction histories and a front-end pension projection, which
would have to be compliant with existing Department for Work and
Pensions regulations.
Turner also wants individual employees, or advisers acting on
their behalf, to be able to select their investments through an
online interface. The payments system should also be sufficiently
flexible to enable employees to make additional contributions to
their savings accounts at any time.
Insurers said they were ready to manage the proposed NPSS, since
they had spent much of 2005 ensuring their compliance with the UK's
simplified pension tax regime, which is due to be introduced on 6
April 2006. From that date, insurers will have to provide real-time
valuations for all their pensions' policies.
HM Revenue and Customs, which Computer Weekly last week revealed
had deferred plans to modernise its IT for the PAYE system because
of capacity and funding issues, would be central to any
government-based pensions initiative. Turner also suggested that
the Revenue's National Savings & Investments could administer
the scheme.
Julian Hynd, head of corporate development and delivery at
National Savings & Investments, said, "The proposed role for
NS&I to act as the administrator or clearing house for the
National Pension Savings Scheme before the funds are allocated to
fund companies would completely change NS&I's focus, as it is a
role we do not currently undertake.
"In addition, it would mean a change in legislation and a large
investment in our operations, including IT, staff and
expertise."
A Revenue spokesman said the organisations would need to wait
for a ministerial decision on the report's recommendations before
commenting more fully, but "detailed scoping work" would also need
to be undertaken.
The national programme aims to create 50 million electronic
health records and allow all GPs to book patients' hospital
appointments online or over the phone. The electronic transfer of
prescriptions and medical imaging systems are also on the
programme's agenda - the largest civil IT project in the world.
The NAO announced its investigation in August 2004 and was
expected to publish the report in summer 2005, but in August this
year publication was put back until November.
Then last week, an NAO spokesman said that although a
publication date had not been set, the report could now be
published in late February or early March next year.
Under parliamentary convention, the factual content of NAO
reports must be agreed with departments before publication - a
process known as clearance.
Bacon said government departments had in the past used the
clearance process to delay publication of NAO reports which
criticised their performance.
"I would not be surprised if the Department of Health was
stringing it out. Although I do not have evidence to support that
it has," he said.
"It is sitting on a time bomb. It is clear from statements by
Richard Granger [director general for NHS IT], leaked memos and
newspaper storiesÉ that there is a row going on behind the
scenes."
An NAO spokesman said the report had been delayed because of its
complexity. "This is not anything unusual. It is a reflection of
the complexity of the report; clearance will take a long time," he
said.
A spokesman for Connecting for Health, which runs the national
programme for IT, said, "We have, and are, co-operating fully with
the NAO. The scheduling of its work and publications is a matter
for them. We shall, of course, take very seriously the report when
it is published."
Paul Goss, director at health IT research firm Silicon Bridge,
suggested that the Department of Health might prefer the report to
be published when Connecting for Health could demonstrate that
applications were in day-to-day use in the NHS. Currently
milestones are announced on the number of roll-outs or number of
doctors registered on a system.