13. The alternatives to using NIRS 2 to support the new legislative requirements included clerical solutions and using other information technology systems (Figure 2). Most of these were rejected because they were not technically feasible or were likely to involve greater risk or cost than enhancing NIRS 2. The Inland Revenue concluded that NIRS 2 was the most practicable option for some 80 per cent of the work required.12
| Figure 2: Alternative options considered for delivering key legislative changes | |||
| Development | Solution | Alternatives considered | Rationale |
| Restructuring of National Insurance contribution thresholds and limits | Full implementation on NIRS | Clerical Defer changes | Affects core NIRS functions. Clerical option not viable as 48 million records affected. Deferral difficult as employers had started amending rates and thresholds on payroll systems. |
| Enabling SERPS pensions to be shared on divorce | Implementation on Benefits Agency system with some modification to NIRS | Defer scheme Clerical Full implementation on NIRS | Could be implemented using Pension Valuation on Divorce System at similar cost. |
| Revised rules for calculating Incapacity Benefit | Full implementation on NIRS | Alternative IT Clerical Deferral | Change manageable on NIRS. Alternative IT system likely to be more expensive. Clerical option available as fall-back. Deferral would jeopardise £25 million of savings. |
| Reform of bereavement benefits | Full implementation on NIRS | Clerical Deferral | No alternative to NIRS which delivered predecessor benefit. Deferral would risk legal claims from bereaved claimants under Human Rights Act. |
| Introduction of stakeholder pensions | Full implementation on NIRS Deferral | Registration of schemes and scheme members could be delivered by EDS on separate system at similar cost, reducing risk to NIRS. | |
| Introduction of State Second Pension | Full implementation on NIRS | Alternative IT Deferral | Timetable not yet fixed so could be implemented on NIRS at lower risk. |
| The joint design team considered other developments, which mainly involved changes to the processing of annual returns from employers, and determined that they could be implemented without amending NIRS. | |||
14. In order to implement the new pensions arrangements, the Inland Revenue therefore identified three main contractual options for commissioning the new NIRS 2 development work. These were to negotiate a contract extension; ask Accenture to provide the additional resources required at Department of Social Security framework rates, under the original contract terms; or exercise the break clause in the original contract and hold a new competition for the continuing operation and development of the system. They saw these as real choices and rejected the view that in practice Accenture were in a monopoly position.13
_________________________________________________________________________________________________________________________________________
12 C&AG's Report, paras 9, 3.2
13 C&AG's Report, paras 10, 3.3; Qs 2, 15-16, 93-94, 175-176