The financial services industry warned yesterday that Lord Turner's proposals to introduce a state-run workplace pension scheme could "eliminate or substantially reduce" the private pensions market, slashing some insurers' sales by 30 per cent.
Deloitte, the global accountancy firm, said the industry would lose out from the increasing number of people ditching private pension plans to save through the new scheme and the fact the new scheme would be administered by the Government, not the private sector.
Mark FitzPatrick, the head of the insurance practice at Deloitte, said: "The proposed changes will have a significant negative impact on the UK financial services market. The life and pensions industry would expect to lose up to 30 per cent of its revenue, putting up to 50,000 jobs at risk. This could have a knock-on effect on their ability to offer other capital-intensive savings and protection products such as annuities."
Mr FitzPatrick said it would make more sense to follow the approach of Australia, where the financial services industry administers and manages the national pensions programme.
Lord Turner's report, published yesterday, proposes that a new scheme - into which employers are compelled to contribute, and into which employees are enrolled automatically - should be administered by the state, with only the fund management outsourced. It is called the National Pensions Savings Scheme (NPSS), better known as Britsaver.
Chris Kenny, the director of life and pensions at the Association of British Insurers, said: "The Government has said one of its tests to evaluate Turner against is sustainability. So to us ... that means it needs to be sustainable for the industry. If you have a new state player, what does that mean for the industry? You've got to be very careful when you consider whether the NPSS passes that test."
Adrian Boulding, the pensions strategy director at Legal & General, said: "Turner ignores the millions of pounds spent by the pensions industry on stakeholder pensions and the Inland Revenue's pensions simplification programme, which offer simple low-cost administration, particularly when combined with auto-enrolment and compulsory matching." And Trevor Matthews, the chief executive of UK Life & Pensions at Standard Life, said: "If we are going to introduce a new savings scheme, the UK savings industry is best placed to provide it."Reuse content