Talks on private sector replacing Nest
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The Government is holding talks with product providers to investigate the possibility of scrapping the National Employment Savings Trust and making it profitable for the private sector to fill the gap.
Money Marketing understands the talks are taking place as part of the Government’s review of Nest, which is due to report next month.
The Government could save £575m over 10 years if it chooses not to go ahead with the second stage of the contract with Tata in October.
A source close to the matter says: “The Government is looking for a model that does not involve public spending commitments and is considering lateral ways of delivering this.”
Another source told Money Marketing: “There is a desire to find ways to save money and there is quite a big potential bill around Nest. If there are other ways of tackling it the Government is up for them.”
Lansons Public Affairs and Regulatory Consulting director Richard Hobbs adds: “I hear the review is becoming more radical as time goes on. There is a growing feeling that Nest is under a lot more scrutiny than was previously implied by the Government.”
Last October, Money Marketing revealed that a consortium of leading life offices had been established to draw up a plan B alternative to Nest for the Conservatives.
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Readers' comments (15)
Anonymous | 5 Aug 2010 9:36 am
In fairness Labour should have taken this approach in the first place. Instead they wasted millions of pounds of taxpayers money to set up a scheme for which only one outsourcing company expressed an interest.
It will be interesting to hear the coalitions new proposal. It does make advising corporate clients a total nightmare. We have been telling them about personal accounts/nests for a few years now.
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Anonymous | 5 Aug 2010 9:43 am
Fantastic. At last, a government seeking a solution from the people in the industry and not the FSA !
If opinion could be sought from IFA's as well then just maybe, we'd get a sensible, consumer friendly package.
Somerset IFA
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Easton | 5 Aug 2010 10:00 am
They should you use the Group Stakeholder Plans set up by legislation in 2001
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Paul Harding | 5 Aug 2010 10:02 am
Common sense surely. If the private sector could be relied on for Stakeholder plan implementation then whats the difference? State the terms required, and the players will emerge.
Main issue though is to also remove the pointless (achieves nothing valuable) burden on employers with the proposed auto enrolment admin processes
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Heather Allison | 5 Aug 2010 10:08 am
So a very large sum of money may be saved if common sense prevails however how much has already been spent to get NEST this far?
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Anonymous | 5 Aug 2010 10:15 am
I wonder if they will introduce Stakeholder Pensions via insurance commpanies?
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Anonymous | 5 Aug 2010 10:33 am
Was it not a previous government that bribed a whole generation to the tune of £9 billion to 'opt out' of serps. The result? Wrong financial advice to millions producing small pension investments being eaten up with charges. Nest it seems to me is designed for people on low incomes --- not the sort of people the private sector is interested in. When will governments learn that if they want to avoid a mountain of Pension benefits in the future, they need to spend a relatively small amount now.
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Richard Jacobs | 5 Aug 2010 10:43 am
Does anyone believe the only saving is £575m over 10 years. We all know that the hidden costs were going to be much higher and that assumed the model worked. Great news.
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Paul Harding | 5 Aug 2010 10:56 am
I didnt mean that autoenrolment itself shouldnt happen (separate issue), just that the way it is implemented needs to be sensible and business/employee friendly.
THE MAIN POINT surely is that an autoenrolment obligation can be introduced, with any changes to the products that can be used to be dealt with separately.
This whole thing could/should have been so simple and still can be -
Firstly, anounce autoenrolment and the date it will happen;
Secondly, include freedom of CHOICE for clients and employers to use ANY approved pension scheme;
Thirdly, let the private sector create products and BID to be chosen as the DEFAULT product (reviewed annually?) for any clients who dont need or have access to advice. Competition will deliver the best outcome and if the default provider is changed in future, then the previous provider has to transfer all accounts en masse to the new provider unless clients request to stay?
Now, who could choose the default provider? IFAs or the Govt/FSA???
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Julian Stevens | 5 Aug 2010 11:57 am
So here we are nearly 10 years on and the current government is talking about private sector money purchase plans with auto-enrolment.
But will the insurance companies this time round be stupid and spineless enough to allow the government to dictate their contract terms and charges? Doing so last time did incalculable damage to their balance sheets.
Advisers who conned themselves into believing they could ever make any money out of stakeholder must surely be regretting such groundless optimism. Stakeholder pension sir? Yes. We charge a £250 advice fee and a £250 implementation fee. Click, brrrrrrrrrr.
Stakeholder is and was always going to be unworkably unprofitable. The only way to address that, even partially, is for the government to get on with the simplification of pensions that it promised before the election but about which it seems so far to be doing virtually nothing.
Carrot is almost always better than stick. It's a crying shame that people like Mark Hoban seem unable to grasp such a notion.
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