Mixed public and private pensions IT systems move closer as Turner signs off

The prospect of the government and the pensions industry working together on the IT for a new national pensions saving scheme moved a step closer last week, with the publication of the final instalment of Lord Turner's report for the Pensions Commission.

The prospect of the government and the pensions industry working together on the IT for a new national pensions saving scheme moved a step closer last week, with the publication of the final instalment of Lord Turner's report for the Pensions Commission.

When Turner first proposed a government-run National Pension Savings Scheme (NPSS) late last year, it provoked strong criticisms from private sector financial services providers about the government's poor track record with major IT projects (Computer Weekly, 6 December 2005).

The Association of British Insurers and the National Association of Pension Funds subsequently both tabled their alternative visions for running the NPSS, arguing that reusing the industry's existing technology could slash start-up costs and reduce the risks of the project.

But despite their arguments, Turner said last week that he still saw more long-term benefit in a government-run system. At the same time, however, he suggested that private sector insurers could be in the running to provide some of the operational services to a government-run scheme.

Turner said the "significant operational set-up risk" involved in building the NPSS could be cut by building on existing infrastructure. But he also warned that the risks would not be eliminated by outsourcing the operations, making the long-term cost advantages of a government-run pensions scheme all the more compelling.

In response, the Association of British Insurers said it would continue to put forward the case for a privately-run national scheme. It said that its research into common industry platforms had confirmed that the pensions industry was well placed to run the scheme.

The association also said, "We are confident that the model we have proposed is at the heart of the thinking of the Department for Work and Pensions."

The DWP would not respond to Computer Weekly's questions about the possibility that it is engaged in developing a hybrid system between a national scheme and a privately run operation.

A spokesman said, "We are engaging with the industry and with members of the public, and that will inform our response, which will be published in a white paper later this spring."

Andrew Power, an insurance partner at consultancy group Deloitte, said the private-sector case for running the NPSS rested in part on the industry having only recently developed IT platforms for stakeholder pensions, which meant much of their technology was still current.

"The debate started with the public and private sector at opposite ends of the spectrum, but a hybrid scheme now looks a real possibility," said Power.

"It is now in the hands of the DWP and the Treasury, but my guess is that a mixed private/public approach which avoids a new build but retains government control will be the outcome."

 

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