LONDON (Reuters) - A proposed national savings plan could accelerate fund management company mergers and hit firms left outside the system, say industry executives.

A landmark report on the country's pensions regime published this week by the government-appointed Pension Commission recommended a low-cost National Pensions Savings Scheme (NPSS) to ensure all Britons save for retirement. The NPSS, which the Commission said could start by 2010, would choose a few firms to invest money it receives, the report said.

If implemented, the NPSS could have major buying power in the fund market, forcing some companies which it does not choose to go after high-margin clients and niche business instead, said Mark FitzPatrick, head of insurance practice at consultants Deloitte.

Only the largest fund management companies are likely to be hired by the NPSS, so firms may continue to merge, following the merger and acquisition trend of recent years, he said.

The country's investment management arena has seen a number of mergers, such as the purchase by Aberdeen Asset Management (ADN.L: Quote, Profile, Research) this year of Deutsche Bank's (DBKGn.DE: Quote, Profile, Research) UK fund arm.

Employees should be automatically enrolled into private retirement schemes, or the NPSS, unless they explicitly chose not to do so, the report said.

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