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LibDems say Tata has Pada “over a barrel”

Liberal Democrat Shadow Secretary of State for Work and Pensions Steve Webb says Tata Consultancy Services has the Personal Accounts Delivery Authority “over a barrel” now that it is the only administrator left in the bidding process for personal accounts.

 

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.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Would someone explain to PADA what “over a barrell” means.
    From past comments I think it highly likely that they would think it is something to do with the brewery business as in “couldn’t organise a drinking session” in one

  2. This is yet another reason why they should use the existing stakeholder pension framework forced upon employers in 2001.

  3. In order to make my corporate clients Stakeholder compliant, sometime ago I spent a lot of time effecting Stakeholder schemes, producing fact finds, terms of business and reason why letters and not one single member of staff put a single Penney into these Stakeholder GPPs. So that when personal accounts are introduced does it means all my efforts have been a waste of time.

  4. The problem seems to be that politicians and the civil servants who implement for them seem to operate on the basis that the one question they NEVER EVER ask is “what is the simplest, cheapest and least red tape way of achieving what we want to do?”. In fact the question they SEEM to ask is exactly the opposite. Why arent ALL State projects forced to be filtered by the cost and red tape objective BEFORE they even get going?..if they cant be done simply and cheaply, then its prob not worth doing it.
    Thsi is a perfect example. Objective: Increase the amount employers and employees pay into pensions, because we think its good for them to do that. (Lets ignore whether its right or not). Simple easy solution – make employer and employee contributions to stakeholder plans (or PPs even) compulsory from a certian date. Not perfect of course, but objective achieved. Simply, quickly and easily.

  5. You never know another 10 years of pussyfooting around the issue and the political classes (and their lap dogs) may own up to the fact that you don’t get owt for now’t.

    And that is:

    a) Primarily the state cannot & will not continue provide and we all will have to stump up more to have some dignity in old age.
    b) You cannot continue to soak the rich (they either avoid or leave) all must pay their share. Unfortunately it cost the same amount to process an investment regardless of how many noughts there are to the left of the decimal point and the less there are the more of you money will be eaten up in costs.
    c) If you want someone to do a job you have to pay the going rate (an acceptable return on capital employed to the capital provider), and for all types of arrangement that is not some arbitrary figure dreamed up via statist control.

    I continue to dream but in the meantime I serve all that I can cost effectively and make sure my house is in order for when I am to old or knackered to carry on.

  6. Would this result in the administration jobs being outsourced to India?
    If so another great result for public sector employment.

  7. TVF (that’s Voters instead of Customers) is a concept of which politicians have zero concept. By that I mean “let’s make everyone pay into an expensively run national pension scheme so that we can reduce the amount of ‘top-up’ pensions we (the Government) have to pay.”
    By all means charge the contributions, cut out the middleman (ta ta TATA), and carry on paying the MIG out of the accumulated/invested extra contributions. That should sort out the majority of lower paid (and less financially literate) employees. The better paid must be better motivated (tax on pension received guaranteed to never be at a higher rate than relief on contributions, for a start) and the best paid have probably got the means to provide for themselves, so I’m not bothered about them.

  8. Being “Over a barrel” can be a pain in the Bum.

    Couldn’t happen to a nicer bunch of Chaps, a lesson in not tinkering with that which one does not understand perhaps ?

  9. Paul, I’m sorry but this is another case of the Treasury having been exposed to the minutiae obsessed Brown for so many years. While his fingerprints may not be on the actual documents this is very definitely part of his legacy.

    Much as Ed Balls believes that requiring 20% of the population to have ‘enhanced’ CRB checks, and then to stay on a continually updating register for the rest of their lives, is absolutely necessary to protect children and vulnerable adults!

    With this government the laws of unintended consequences have multiplied exponentially with their ever increasing complexity.

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