We have the pensions technology, insurers' association tells Timms

The Association of British Insurers (ABI) has put forward the private sector case for running the proposed new National Pension Savings Scheme (NPSS).

The Association of British Insurers (ABI) has put forward the private sector case for running the proposed new National Pension Savings Scheme (NPSS).

It said that existing technology among its members means it could get a scheme up and running for tens of millions of pounds - a fraction of the projected public sector bill.

Alongside insurers' existing systems, the plan would require unprecedented IT integration by the industry. But the ABIsaid a new pilot project by three member companies to improve the current pensions transfer process for consumers showed how effectively insurers could develop integrated IT systems.

It said first indications were that the project - to replace paper-based processes with electronic communications - would "lead to significant improvements for customers and the lessons learned will be applicable more widely across the industry".

The Turner Report, issued by the Pensions Commission last year, envisaged the NPSS as a public sector operation, but the ABI, leaning on research by Deloitte undertaken on its behalf, said establishing such a national scheme from scratch would lead to a public sector bill of at least £500m.

The association said it can run the NPSS more cheaply than the government for at least 10 years, but has not pledged to meet the 0.3% management charge suggested by Turner.

Instead, the ABI is proposing the creation of a new Retirement Income Commission with responsibility for economic regulation of this part of the pensions market, including defining acceptable costs and charges.

"We haven't put a figure on the management charge because we are talking about establishing a brand new system," said ABI spokesman Jonathan French.

"At this stage, it is not helpful or feasible to say 'this is the charge'."

The ABI met privately last week with Stephen Timms, the minister for pensions reform, and John Hutton, secretary of state for work and pensions, to discuss its proposals in detail.

A Department for Work and Pensions event, at which key stakeholders will come together to debate alternative approaches to Lord Turner's plans, is slated for next week.

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