The Association of British Insurers says it is unlikely providers could fill the gap if the National Employment Savings Trust did not go ahead, even if auto-enrolment parameters were adjusted.
Money Marketing revealed earlier this month that the Government has been holding talks with product providers regarding the feasibility of an industry-led replacement for Nest. It could save £575m over 10 years if it chooses not to go ahead with the second stage of the contract with Tata in October.
But in its submission to the Department of Work and Pensions’ review of auto-enrolment, the ABI states: “The rationale for Nest is not that the industry does not want to serve certain sections of the market but that for some employers the industry will only be able to do so on terms which are either unacceptable to the employers or unacceptable to politicians and/or regulators.
“This also impacts employees as they have no choice over the scheme they are enrolled into. This means that, as things stand, it is unlikely that the private pensions industry could fill the gap is Nest did not go ahead. It would remain unlikely even if the parameters for auto-enrolment were adjusted as proposed in this submission.”
The ABI wants the current auto-enrolment band of age 22 up to state pension age to be retained and believes no one should be excluded based on the size of the firm they work for.
But it says auto-enrolment should only apply to those earning £10,000 per annum or more.
The trade body says only basic pay should qualify as earnings and contribution calculations should start from the first pound of earnings.