Stephen Timms, the pensions minister, laid down a challenge to the savings industry to come up with its own blueprint for a new national pensions scheme yesterday, reassuring fund managers and insurers that the Government would consider a private sector-run plan if it could keep the costs down.
The savings industry reacted angrily last week to proposals in Lord Turner's pension report, which called for the launch of a new state-administered workplace pension scheme. The Association of British Insurers (ABI) claimed that the financial services industry would be much better placed to manage any new scheme than the Government.
But speaking at the ABI's Saver Summit in London yesterday, Mr Timms said that the Government would not rule out using the private sector, if it could be convinced that it would be as cheap, or cheaper, than the plan suggested by Lord Turner.
"Today, I want to issue a challenge," he said. "I'm challenging you to work up the details of an alternative approach by February - and then as part of the National Pensions Debate I'm going to ask the ABI to host a joint event with Government in which you can come forward and present this alternative model."
However, he warned that any model would have to ensure there was a "radical" extension of the number of people having access to affordable pensions in the UK, especially those on low and moderate incomes, as well as the self-employed.
"If you can design a detailed, workable model that meets these criteria and can match the Turner version for a broadly comparable level of charging, then that will be very attractive to us in Government," he continued.
"The decision, when we make it, will be a pragmatic one. We are serious about building consensus, and we are in no doubt as to the potential attraction of an industry-led model.
"But we also mean what we say about getting on with reform. The choice is over how we act - not whether or when. The pensions of tomorrow depend on the decisions people make to save today. So we must act quickly to develop the building blocks of a Government package which can be widely supported."
Mr Timms said the Government now plans to publish a White Paper in the spring laying out its plans for pensions reform. However, he admitted it would not be as bold as the Turner report.
Stephen Haddrill, the director general of the ABI, said: "We will develop our own specific proposals for a private sector alternative that meets Lord Turner's and the Government's challenge. And we will do so in good time for the Government's White Paper in the spring."Reuse content