Standard slams idea of using NI system for Nest
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Standard Life has criticised the suggestion that the National Employment Savings Trust should use existing National Insurance systems to collect contributions, claiming it would be “messy” and give Nest an advantage over industry schemes.
Last week, Legal & General predicted the Government would look to make savings and reduce the burden on employers by using the NI system for Nest. Tata Consultancy Services is set to perform this role.
But Standard Life head of pensions policy John Lawson says the system is used to collect contracted-out contributions and they are “invariably wrong”.
He says: “You also only get the contribution around 18 months after the NI contribution is deducted. If you are paying into your pension, you want to be invested straight away. Would the Government have to give people a credit for a return on Government bonds for that period? It would be really, really messy.
“The providers with lots of individual personal pensions favour this because it allows people to choose these as an opt-out vehicle. If you have a book of half a million personal pensions, it is highly likely they will be cancelled as the employer will place those people in a group scheme.”
Lawson says using NI systems would subsidise Nest, creating an uneven playing field between it and the industry.
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