For immediate release: Friday 10th February 2006

NPSS “PERFECTLY WORKABLE”
IMA responds to Timms challenge

The Investment Management Association (IMA) today published its response to the “Timms Challenge” – the call by DWP Ministers for the financial services industry to put forward proposals in response to the Turner Commission’s National Pensions Saving Scheme (NPSS).

In its paper, the IMA argues that if the Government decides to go ahead with the scheme, the centrally managed model proposed by the Turner Commission will stand the greatest chance of success.  In particular,

• A properly constituted, independent and fully accountable Board would provide crucial oversight on behalf of scheme members in the way that trustees do for members of occupational pension schemes
• It would enable scheme members – people on low to middle earnings with little or no financial assets – to get access to professional institutional management of their investments
• Economies of scale and competition would ensure the best value for money for members
• There is a proven infrastructure in the private sector to manage individual accounts

A key part of IMA’s proposals is the management of the “default” arrangement, which experience shows the majority will opt for.  For the sake of those individuals – and to avoid future governments getting embroiled in arguments about investment policy – the default fund needs to be professionally managed by a competent body which is accountable for its decisions.  IMA’s proposed structure is put forward as the obvious way to achieve that.

Richard Saunders, IMA Chief Executive, said:

“If the Government is going to go for this scheme, it is clear that the right way is to build on well established structures in the institutional pensions market, and not to treat the scheme as if it were offering retail products.  The scheme as broadly proposed by the Commission is therefore perfectly workable.  In addition, the structure we propose delivers strong independent governance, no Government involvement in investment decisions, and clear ownership of the assets by individuals.

“There has been a good deal of misleading comment about Turner’s NPSS over the last few weeks.  Our paper seeks to dispel the myths and to put forward a serious and workable set of proposals.”

IMA’s response is attached.

 - ENDS -  

For further information, please contact:
Helen Stephenson, Communications Officer, IMA, 020 7831 0898

Out of hours contact:
Mona Patel, Head of Communications, IMA, 07834 089332