TCS bags £600mn UK pension deal

Software major Tata Consultancy Services (TCS) is all set to bag a £ 600 million outsourcing contract from the UK Government for managing a state-sponsored pension scheme that is still in the works.

UK’s Personal Accounts Delivery Authority said on Tuesday that TCS has emerged the successful bidder for a ten-year arrangement to ‘set up’ and ‘administer’ the National Employment Savings Trust (NEST), a scheme to be launched by 2012.

NEST, which is being designed and implemented to augment the existing employer-provided schemes, is expected to benefit nearly six million British citizens, when it becomes fully operational.

Two stages

“The contract is divided into two stages and runs for 10 years, with possible extensions for up to a further five years. The first stage will run to October 2010, allowing TCS to begin the activity required to set up and administer NEST,” PADA said in a press statement.

“Prior to the expiry of the first stage, a decision will be made on whether to proceed with the contract for the remainder of the contract term,” it said.

TCS will be responsible for providing IT-enabled services related to employer participation, member enrolment, collection and reconciliation, cash management, accessing pension savings and administration of accounts.

 Vidya Ram reports from London: “We broadly expect the contract to be worth £600 million over the next ten years, including VAT and inflation,” a spokesperson for PADA told Business Line. Personal Accounts Delivery Authority is a British public body, entrusted with setting up NEST.

The deal is not without controversy in the UK, TCS ended up being the sole bidder after several, including Logica UK and the ATP Group which runs the Danish state pension fund, pulled out of the race, leading to some concerns about the lack of competition.

Hobson’s choice

“It was essentially a Hobson’s choice,” Liberal Democrat spokesman on pensions, Mr Steve Webb, MP, told Business Line. Though most companies that bid for the contract have not spoken about their reasons for pulling out, Mr Webb said that concern over the attainable margins had put them off. “Margins would have been thin, if you are running a trust for low-to-middle income families; you couldn’t justify it all going into charges,” he said.

“We had a competitive dialogue. The other companies were given information along the way to make the decision as they saw fit,” said the PADA spokeswoman.

Published on Wed, Mar 03, 2010 at 09:35   |  Updated at Wed, Mar 03, 2010 at 12:20  |  Source : Business Line

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