Insurers have responded to the government's white paper on the planned new pensions saving system by setting out a detailed alternative to be run by the private sector.
Published in May, the white paper supported the creation of a public body to develop and administer the IT systems at the heart of the scheme.
The Association of British Insurers (ABI) has also questioned whether the public sector could be trusted to run a major IT project given its past failures.
Stephen Haddrill, director general of the ABI, said it would be a brave decision by the government to try to develop its own pensions systems given its track record on IT projects. "As the Department of Work and Pensions' recent axing of a £140m benefits payments system shows, the public sector does not run these things well," he said.
The ABI has spent the three months since the white paper's release developing its Personal Accounts blueprint. It replaces the government's National Pensions Savings Scheme with one that uses a private sector-run clearing house to act as the interface between employers and pension providers.
The association said that establishing a "thin" electronic clearing house had been costed by consultancy Deloitte at between £25m and £50m. Its key functions would be:
- Setting up accounts
- Linking individuals to the correct provider
- Transaction handling from employers and individuals
- Checking and reconciliation
- Enabling payments continuity when individuals move jobs
- Enabling the transfer of Personal Accounts between providers.
Haddrill said the success of the Banks Automated Clearing System proved that the private sector could build centralised systems effectively.
To mitigate set-up risks and control costs, the ABI proposed that initially customers should not be allowed to transfer funds collected in Personal Accounts to other types of pension funds.
"Building the infrastructure to enable [transfers] from the beginning would add avoidable risk to the implementation process," it said. "Against this background, transfers out of Personal Accounts should be introduced only once the system has settled down."
The government is due to reveal its final plans for pensions by the end of the year, but the ABI said it was concerned that, for a working scheme of any sort to be delivered by April 2012, the government must not delay its decision.
Read article: £140m public IT lesson
Vote for your IT greats
Who have been the most influential people in IT in the past 40 years? The greatest organisations? The best hardware and software technologies? As part of Computer Weekly’s 40th anniversary celebrations, we are asking our readers who and what has really made a difference?
Vote now at: www.computerweekly.com/ITgreats