Savings industry experts concerned over state's track record with massive IT projects.
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.