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Fidelity designs two-tier NPSS model

Fidelity has put forward an alternative to the NPSS which would enable savers to opt out of the basic scheme to access wider investment choices.

Under its open personal account scheme, savers would be auto-enrolled into a personal account based on the low-cost default fund set out by the Government. An open-market option would also be available for those wanting a wider range of funds. These would include stakeholder-style products from a range of providers with the additional costs falling exclusively on those taking out this option.

Director of defined-contribution development Richard Parkin says a centralised agency built on the system used by the Government to calculate and collect National Insurance contributions could act as a clearing house as a new system would create huge disruption for employers.

He insists Fidelity is keen to be involved in the default fund but says the proposed 0.3 per cent charge cap needs to be raised significantly.

Parkin envisages advice playing a significant role in the open-market option although he says it would be difficult to see how this could be funded.

Aegon head of pensions development Rachel Vahey says: “Fidelity talks about an open-market option with providers offering products resembling stakeholder products but haven’t we got that already?”

Parkin says: “That is a very cavalier attitude as it involves denying these people the advantage of employer contributions they would not get outside the NPSS.”

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