Sir, Your article "Pension income 'threatened by low-cost scheme' '' (August 18) understates the gap between the good intentions and the likely outcome associated with the planned national pensions savings scheme (NPSS).
You focus on the potential problem of employers levelling down contributions for their employees. But this undesirable policy consequence may be compounded if employers that currently contribute little or nothing manage to resist government pressure to participate in the NPSS at all.
Government research quoted in the recent white paper suggests a majority of employers will comply with the NPSS. But acquiescence in a research survey is a long way from compliance in practice. At best, employers face mixed motives. They are being asked to make contributions that for many will be entirely incremental.
This burden may be compounded by the administrative complexity of participating in a well-intentioned scheme that is nevertheless new and untried. These disadvantages may more than counterbalance the moral argument. And those employers wishing to wheedle out of their legal obligation to participate in the NPSS have to do no more than encourage their employees to opt out.
Policymakers must surely take heed that a successful NPSS will be based on employer and employee enthusiasm rather than half-hearted acquiescence on the part of the former and indifference on the part of the latter. A low-cost scheme is necessary but far from sufficient.
