Introduction
On 30 November 2005 Lord Turner published his eagerly awaited recommendations for pension policy in the UK. This short paper offers our views on his recommendations for a National Pension Savings Scheme (NPSS) and the possible implications to the Financial Services industry as both employers and providers of pensions business.

Turner’s key recommendations
The Turner report represents a positive step in helping to address the looming pensions crisis in the UK by tackling both the adequacy of state pensions and widening private pension provision. The key recommendations of the report include:

• Linking the state pensionable age (SPA) to life expectancy which could therefore raise the SPA from age 65 to 68 by 2050.
• Linking future increases in the basic state pension in line with earnings rather than prices.
• Changing the State Second Pension to a flat amount.
• Encouraging more private savings through setting up a National Pension
  Savings Scheme (NPSS) for everybody in the workplace. This could be introduced by 2010. Employees would automatically be enrolled into an NPSS, unless they opted out. Contributions of 8% (3% from employers, 5% from employees) of relevant earnings (between £4,888 and £32,760) would be paid into individual accounts. A limited set of investment choices would be available.
• Reducing the cost of pension savings by lowering the need for advice via autoenrolment and use of default investment funds, collecting premiums through existing PAYE systems, and administering the funds centrally.

Find out more about how Turner's recommendations (65KB, PDF) will impact the Financial Services industry.