Embargoed until 0001 Tuesday 28 February
MAKING THE NATIONAL PENSIONS SAVINGS SCHEME WORK
Ahead of the Department for Work and Pensions event “Alternative approaches to the National Pensions Savings Scheme”, at which the views of the Investment Management Association (IMA) will be presented, IMA has outlined the key principles which should underpin the proposed National Pensions Savings Scheme (NPSS).
All evidence from international and UK experience is that most people will want the choice of a good, professionally managed default option. The IMA proposal therefore focuses on providing such an investment option, intended to be simple for both members and employers. Members must be able to understand the options and employers must not be overly burdened with administration. Take-up will be critical so the message is clear – keep it simple. This approach has the further advantage of delivering the cheapest management costs.
Fundamental to the success of the NPSS will be how it is governed. IMA recommends an independent Board, accountable to Parliament, with an overriding statutory duty of care to the members. Consumer surveys suggest that it is real independence which will enable potential members to have trust in the scheme.
Richard Saunders, Chief Executive of the IMA commented,
“If properly implemented, with an appropriate governance structure to safeguard the interests of members, the Pensions Commission’s model for an NPSS will enable people on low incomes, who currently do not have a pension, to have professionally managed retirement savings giving excellent value for money. This may well be the most significant financial asset of most people in the NPSS target group and it is right that any policy aims to ensure the highest standards in looking after their savings. Our proposals take the outline recommended by the Commission and develop it into what we believe is a fully workable scheme.”
A summary of IMA’s proposal is attached.
Notes to Editors
- The Pensions Commission’s Second Report, published on 30 November 2005, recommended, among other things, the creation of a National Pensions Savings Scheme.
- In December, Minister of State for Pensions Reform, Stephen Timms challenged the industry to come up with alternative proposals. Today’s event is an opportunity for IMA, ABI, NAPF and the Pensions Reform Group to put forward their proposals.
For further information, please contact:
Helen Stephenson, Communications Officer, IMA, 020 7831 0898
Out of hours contact:
Mona Patel, Head of Communications, IMA, 07834 089332