The National Pensions Saving Scheme (NPSS) will benefit average earners by an estimated £15,500.
A new report from consumer group Which? has revealed that average earners are likely to build up 15,500 more over the lifetime of their pension than those in commercial schemes.
Which? estimates that someone earning £23,000 a year would be £52 a month (£621 a year) better off under NPSS than under the personal pension scheme model, with a charge of 0.7 per cent, proposed by the Association of British Insurers (ABI).
In a statement on the report, Mick McAteer, Which? principal policy adviser, said that the NPSS, proposed by pensions commissioner Lord Turner, offered hope of a new consumer-focused pensions system and must not become "the biggest gravy train in recent history for the insurance industry".
"Industry claims to be able to run a scheme with a charge of 0.7 per cent, but there's no way they can deliver at this level when experience of stakeholder pensions shows us that they couldn't even deliver at 1.5 per cent," he explained.
Mr McAteer suggested that a state-run NPSS would benefit the people the government is aiming to help build up adequate retirement savings and encourage to save for retirement.
The insurance industry is proposing that any national saving scheme should be run by an approved number of pensions providers rather than the state.To read more about Banking News, click here.
© Adfero Ltd