Treasury plans to review Tata contract with Nest
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The National Employment Savings Trust contract with administration provider Tata Consultancy Services will be reviewed as chief secretary to the Treasury Liberal Democrat David Laws begins the Government’s £6bn cost-cutting drive.
Laws will meet with secretaries of state, including Work and Pensions Secretary Iain Duncan Smith, asking them to re-examine all spending approvals given since the beginning of the year and all pilot schemes. Proposals that previously required Treasury approval will have to be resubmitted to the Treasury.
Laws says projects that are good value for money and in line with Government priorities will go ahead but it would be “irresponsible” to waste money on ones that are not.
Former pensions minister Angela Eagle signed the first stage of the two-part contract for the Nest scheme administration services in March.
The overall contract is set to run for 10 years, with possible extensions for a further five years, and is worth around £600m. The first stage was scheduled to run until October this year, allowing Tata to begin setting up the systems required for Nest.
Newly-appointed pensions minister Liberal Democrat MP Steve Webb will be charged with signing the second stage of the contract if it passes the Treasury review.
Legal & General predicts the coalition will look to make savings and reduce the burden on employers by using the National Insurance system to collect pension contributions for Nest. Tata is currently set to perform this role.
Adrian Boulding, Wealth policy director at the com-pany, says: “This proposal would make life easier for employers who would just have to fill in one return instead of two and would save money because another system would not have to be built from scratch.”
A third-party provider would still be required for other parts of the administration.
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Readers' comments (2)
Paul HArding | 20 May 2010 4:03 pm
I hope this govt learns the mistakes of the last this is a prime example. The previous mob confused the objective of introducing compulsion with the need to reinvent the wheel. Compulsion can be introduced without any new "system" . Just set out acceptable parameters for providers and then approve products that can be used by employers into which to pay compulsory contributions. So so so so simple. No costs, collection systems and admin already in place in many many providers, and this may encourage new ones too into a competitive market. Just separate compulsion from the allocation. Save £600 million.
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Phil Castle | 20 May 2010 6:36 pm
I agree with Paul Harding and have been saying it for nearly 10 years now as we were establishing GPPs in 1998 and then Group stakeholders from 2001 in anticipation of entry by default which never happened. We invested a lot of time and effort getting schemes up and running for employers with the few staff who wanetd to enter without compulsion, but were never rewarded for our efforts by the next stage being implemented and in fact have been stitched up with the plans for Nest
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