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‘Turner misrepresenting US thrift system figures’

Standard Life head of pensions policy John Lawson believes Lord Turner is misrepresenting the charges on the US federal thrift system, one of the inspirations behind his National Pension Savings Scheme.

Lawson says figures taken from the US model in the Pen- sions Commission’s report are misrepresented and misleading.

Turner’s report says the federal thrift savings plan is run at an annual management charge of 0.06 per cent but Lawson says further investigation reveals that Government contributions of 1 per cent of federal civilians’ salary only start after they have completed three years’ service, effectively subsidising the system.

Thereafter, contributions are matched dollar for dollar on the first 3 per cent of salary and 50 cents for the next 2 per cent. Contributions of over 5 per cent of salary are not matched.

Lawson says: “The Pensions Commission is supposed to be independent but what we are seeing is a telling of half-truths. The real costs of the US federal scheme is a lot higher than 0.06 per cent. If Turner cannot present credible funding plans, can we trust the rest of the report? He is pushing an agenda that is fundamentally wrong.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “Ultimately, our calculations show there is not a huge gap with what the industry currently delivers. This is a huge opportunity for the industry to show the Government what it can offer.”

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