Pensions minister Steve Webb says he is “reflecting” on whether or not to remove restrictions placed on the national employment Savings Trust.
Transfers in and out of Nest are banned and annual contributions are capped at £4,200.
These restrictions were due to be looked at again in a review in 2017. With the delay to auto-enrolment for smaller firms, it is unclear when this review will go ahead. Speaking at work and pensions questions in the House of Commons this week, Webb said the restrictions were put in place to ensure that the scheme focused on low to middle-income earners.
He said: “The situation has moved on, competitive developments in the market have emerged which were not necessarily foreseen so we are certainly reflecting on the role of those constraints. We have more competition than perhaps was expected. Nest is coming in at 0.5 per cent, others in some cases are coming in below that.”
However, giving evidence to the work and pensions select committee this morning, two days after he made the comments, he moved to quash any speculation of an immediate removal. He said: “Reflecting turned out to be a stronger verb than I expected. I eagerly await this committee’s recommendations.”
Lowes Financial Management senior technician Barry O’Sullivan says: “Pension providers will be concerned if this happens because Nest might take even more of their business. For savers, these are more rules to navigate and more complexity puts people off.”
Webb warned that although he is “encouraged” by the level charges emerging from competitors in the auto-enrolment space, he is “absolutely prepared” to cap them if necessary.
Last week, Labour leader Ed Miliband said he would push for pension charges to be capped if they do not fall.