THE BIG QUESTION

THE QUESTION

Should Lord Freud’s review of Nest recommend pulling the plug on the project?

THE ANSWERS

Stuart Southall, Association of Consulting Actuaries

No. The basic aspiration behind Nest – of much extended pension provision part supported by employers – remains valid. Government is rightly looking again at some of the details of delivery but the ACA does not detect a fundamental reluctance to proceed.

But what remains essential in our view is to ease regulation on existing occupational schemes so that these can be maintained, or better still re-invigorated, before Nest is launched. This requires genuine legislative simplification to permit “middle way” risk-sharing models to be launched free of the full panoply of requirements which have done so much to stop defined benefit provision in its tracks.

Were the launch of Nest to lead to any significant levelling-down in current benefits, which the ACA still considers to be a real danger, it remains possible that, across the private sector at least, aggregate savings for retirement will actually fall. Pension provision should remain a key element of such savings – built on the foundation of adequate State benefits.

Neil Gough, client services director, Creative Benefit Solutions

No. Without a doubt the road to where we are now with Nest has been littered with expensive decisions. These include some decisions which cannot be amended, including the £360k spent on changing the name from Personal Accounts, and some which can, including the administration contract with Tata worth around £600m.

In these difficult economic times it is entirely appropriate that decisions taken so far on Nest should be reviewed, with contracts renegotiated if possible, but it is even more appropriate that Nest continues as a principle and ideally with the same installation dates as have been previously publicised.

Despite the introduction of the triple link for the basic state pension in the Emergency Budget announced by the coalition Government it remains the case that people retiring in the future will need an element of private pension provision if they are to successfully achieve the retirement lifestyle they desire.

This is where Nest can help, as not enough people are currently saving enough money for their retirement years.

Brendan Barber, general secretary, TUC.

Of course we recognise the right of a new government to look at the decisions it has inherited from its predecessor. But the plans for auto-enrolment have won wide support and have been built through a careful process of finding consensus.

Neither employers, the state nor the pensions industry are currently serving the needs of millions of private sector staff on modest incomes failing to build up any pension at present.

The only solution that works for them is auto-enrolment, an employer contribution and a new low-cost state sponsored scheme that can remedy the failure of the industry to provide attractive pensions to lower income employees – particularly women who are more likely to take career breaks and move between employers.

Ministers should not forget that detailed implementation of the 2012 plans has been planned with strong involvement from employer, pensions industry and consumer groups. It is therefore disappointing that the review team includes no union or other consumer voice, and appears to have little experience of pensions issues for women and lower paid workers.