Speaking to Money Marketing, Webb says Pada’s announcement earlier today that Great-West Retirement Services has pulled out of the running was an “alarming development” and further undermines the future of personal accounts.
Webb says: “I think that is a very worrying development. The first question is what happens if Tata now pull out?
“Because if the others have decided it is not going to be lucrative enough, this lot could too, which could completely stymie the whole thing.
“On the other hand, Tata now know that they could completely stymie the whole thing if they pulled out so they’ve got Pada over a barrel.
“I think it is a very alarming development and further undermines the whole policy really.”
Pada chief executive Tim Jones says that signing a contract with Tata is not yet a foregone conclusion.
He says: “The competitive dialogue process has been designed to lead us to a successful conclusion and we are close to achieving that.
“TCS have responded positively to all Pada’s requirements and are providing excellent evidence about how they intend to deliver these. We expect TCS to submit strong final proposals, but we obviously need to evaluate these against our evaluation criteria – including cost.
But he adds: “Signing a contract with TCS is not a fore-gone conclusion but we have high expectations that an agreement can be reached. Our priority is to get value for money for personal accounts scheme members and to agree a solution that will meet our requirements – we are confident we can do that.”
Watson Wyatt senior consultant Paul Macro says: “You have to wonder whether this is a case of the public sector putting off potential suppliers by constantly changing its mind about the contract terms.
“All of this will affect the job that the personal accounts administrator has to do and potentially how much they get paid for it – especially as the employers using personal accounts will be more concentrated at the back of the queue.
“Two months ago, there were four providers in the running and Pada said last month that it was ‘very confident we will have a strong competition for the final contract’, so it’s unlikely that they intended to go exclusive at this stage.
“If only one company will sell to you, you’re not in a great position to haggle over price.
“Most of the tax revenue the Treasury gets from delaying the reforms is simply brought forward from later years but the impact on people’s savings could be permanent if the personal accounts scheme has to pay a premium for political meddling.”