Pensions reforms come under fresh attack

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The Independent Online

Mr Pickering, who reviewed the UK pensions market for the Department for Work & Pensions four years ago, will also criticise the Government for being a slave to "soundbite politics" in its reform of the UK pensions system.

He will tell delegates at the National Association of Pension Funds (NAPF) conference in Edinburgh: "First we had personal pensions, then we had stakeholder pensions, now we have NPSS pensions. Successive governments seek to secure their legacy by launching a soundbite pension product which is seen as a cure-all.

"The NPSS is not a silver bullet but could do lethal damage to the existing fabric of occupational and personal pension arrangements. The NPSS is but one recommendation [in Lord Turner's report], and to me, the most unattractive recommendation. If introduced as proposed, it could do damage to existing provision, fail to play to the UK strength of diversity and lead to a planning blight."

Mr Pickering will stress the importance of keeping employers at the centre of any pensions reform, claiming workplace schemes are "not past their sell-by date". He will also urge companies that still have defined benefit schemes to persevere with them, in spite of rising costs and increased regulation.

"Well-intentioned, but misguided, interference in workplace pension-scheme design by successive governments has been the single most important cause of the withdrawal of employers from risk-sharing pensions," he will say.

"Employers are, in turbulent times, having to honour promises which they never voluntarily made. Great care should be taken before once more interfering with the design of workers' conditions of employment."

Mr Pickering's attack comes weeks before a government White Paper into pension reform, which will lay the groundwork for the implementation of many of Lord Turner's proposals.

Although the insurance and pension-fund industries have proposed an alternative to Lord Turner's NPSS, the Secretary of State for Work and Pensions, John Hutton, has hinted that the Government is not impressed with their suggestions. It is believed the Government will push ahead with proposals to ensure all employees are enrolled into a pension when they begin work.

It remains unclear whether it will commit to Lord Turner's idea of creating a government-administered pension fund, or whether it will follow up his suggestion to compel employers to contribute to their staff's pensions. Lord Turner believes a centrally run scheme would need to charge savers 0.3 per cent a year to cover fund management and administration costs.

The Association of British Insurers has rubbished his calculations as unrealistic, saying its members could run a more efficient system for 0.7 per cent a year.

The NAPF has proposed creating a series of independently run "supertrusts", which it claims could be run for about 0.45 per cent a year.

Frank Field, the former social security minister, has urged the Government to replace the state second pension with a funded defined benefit pension, into which all employees would be compelled to contribute.