Benefits of a government-backed NPSS
A government-run National Pension Savings Scheme (NPSS) would be pro-consumer and cost-effective compared with a privately run pension scheme, according to an independent advisor.
Research by Which? found just 20 per cent of people would have trust in the government to manage their pension compared with 40 per cent who would pick an independent body but the consumer organisation believes a NPSS would offer the best option.
A key benefit of a NPSS is affordability, according to Which?, as annual management fees would be set and maintained at 0.3 per cent but the insurance industry would have to charge between one and 1.4 per cent a year to run the same kind of scheme.
"People on lower to average incomes will really benefit from NPSS. These are precisely the people that the Government has pledged to help out of the pensions black hole and who must be encouraged to save if the pensions crisis is to be solved," said Mick McAteer from Which?.
As all employees will be automatically enrolled into funded pensions with the right to opt out the NPSS could be considered more sustainable.
Compulsory contributions shared between employers and individuals with consumers having legal rights to their own pensions savings would also make them fairer compared to a private pension scheme where the firm would have legal ownership.
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