The government is to commission a new IT infrastructure to run its proposed retirement savings products, which it calls personal accounts.
In a white paper published last week, the Department for Work and Pensions (DWP) confirmed that the National Pension Savings Scheme (NPSS) would be set up to manage compulsory pensions for people on low incomes.
The DWP rejected the alternative means of managing personal accounts put forward by the insurance industry’s trade body, the Association of British Insurers (ABI).
Under the alternative method, the government would have randomly allocated personal accounts between different insurance companies. The ABI argued that this method would be at least as cheap as setting up the NPSS because its members could reuse their existing pension administration systems.
The government’s next step will be to set up a delivery authority with the responsibility for choosing the IT systems used to administer personal accounts.
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