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ABI vows it will meet deadline for NPSS alternative

The ABI has scuppered rumours that it is pulling out of pensions minister Stephen Timms’ challenge to propose an industry alternative to the national pension savings scheme.

Timms challenged the industry to put forward a viable alternative to the 0.3 per cent management fee scheme proposed by the Pensions Commission but ABI members agree that any arrangement will be hard pressed to please smaller insurance companies which may feel that they are being squeezed out of the picture.

Head of media and political affairs Alan Leaman assures the industry that the ABI will come up with an alternative by the February deadline.

He denies that the ABI leapt blindly at the challenge without discussing whether it is the right solution.

Leaman says: “I can confirm that we are on course to ful- filling the challenge by February. We are working intently with all member companies.”

Standard Life head of pensions policy John Lawson says there are concerns among smaller ABI members that Adair Turner’s proposals may result in bigger firms domina- ting the group pension market.

Lawson reiterates that an ABI alternative may offer a role for advisers but that advice would have to be from fees rather than commission-based.

He says: “There is some unease that there will be five big survivors at the top dominating the group pension market. Not all companies will do well out of the NPSS and some may be trying to undermine the proposal altogether. But we are getting closer to an agreement.”

Although the ABI is not expected to match the 0.3 per cent annual management charge, members agree that Turner has failed to publish any factual basis for these charges without heavy subsidy from taxpayers.

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