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More whitewash?

It looks as if we could still be in for years more of argument over pensions

Those bored to death with the continued debate over who will run the national pension savings scheme will be sorely disappointed if newspaper leaks are to be believed.

According to reports, this week’s White Paper will put forward at least two proposals for running the scheme. The Government will include both Turner’s vision for a state-sponsored single scheme and something closely resembling the Association of British Insurers’ alternative for the NPSS to be run by a number of industry providers.

It appears the Government has not settled its strategy for pension reform and has misgivings about all the proposed approaches for the NPSS. It means we can look forward to months – perhaps years – of the same incessant lobbying and public argument over whose hands the future of pension saving should be in.

For the last few months, the industry has been expecting some kind of open-ended legislation rather than a definite decision on the scheme, allowing the Government time to chew over the arguments. However, there is bound to be a nagging worry that by further postponing the difficult decision, the Government is repeating previous welfare policy failures and looking to kick this political hot potato into the long grass.

It does make sense to avert negative publicity around the NPSS away from the publication of the White Paper, as the Government tries its best to focus on the vote-winning upsides of the reforms such as benefits to carers and women.

Prime Minister Tony Blair can now take forward plans to reform the basic state pension – where there seems to be political consensus and leave this messier, technical NPSS issue for a future Bill.

With the future make-up of Westminster far from certain and a long backlog of reforms to deal with, ranging from education to immigra-tion, will there be the politi-cal will to take the NPSS prop-osals to their conclusion or will they be swept away in the midst of political upheaval?

Assuming the leak is correct, the biggest victor appears to be the ABI, as in recent weeks the political tide seemed to be turning away from the trade body’s solution. The likes of Which?, Lord Turner, Ned Cazalet and the Treasury select committee all lined up to shoot it down.

Interested parties are due to meet Department for Work and Pensions and Treasury officials over the next few months in the hope of removing lingering doubts MPs and civil servants have about both schemes.

If the ABI is to get its way, it will have to allay fears about the costs of the scheme for consumers and worries about the past performance of its members in the stakeholder initiative and various misselling scandals.

This week’s Treasury select committee report calls on the ABI to further justify its belief that competition between providers can bring down costs . Screams of derision from Which? principal policy adviser Mick McAteer will resonate strongly with the Labour backbenches.

There is also concern that providers will crank up costs once their foot is in the door. Many in Parliament sense that the ABI’s Partnership Pensions proposal is focused far more on self-preservation than on serving the best interests of savers.

The recent resurgence of the Tories could play into the ABI’s hands as they appear to be far keener on an industry-led solution. It looks as if they will have a much stronger hand in influencing reform than was expected a year ago, especially if a final NPSS decision spills over past the next general election.

Turner’s suggestion for a single Government-sponsored organisation to run the scheme raises the spectre of the Child Support Agency and other Government project failings.

Outsourcing the project to a safe pair of hands, with names floating around the DWP including Capita and Unisys, could counter fears of incompetency but raises its own political problems after the recent cash for peerages scandal and doubts over costs.

Add to this explosive mixture debates about different charging structures, continued Treasury concerns about the costs of any type of NPSS and a potential early election after Gordon Brown’s ascension to the Premiership, and the clear picture that the industry hoped for following the White Paper is covered in a thick layer of mud.


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