The Association of British Insurers has softened its stance on lifting Nest’s restrictions early, potentially paving the way for an accelerated review of the scheme in 2014.
Nest is currently shackled by a transfer ban and an annual cap on contributions of £4,400. These restrictions, which were put in place to ensure the Government-backed pension scheme focuses on its target market of low to medium earners, are due to be reviewed in 2017.
In November, the Department for Work and Pensions issued a call for evidence asking whether the restrictions are influencing employers’ choice of automatic enrolment scheme in a way that was not intended.
The issue has divided insurance companies. Aviva is calling for the restrictions to be removed, while Aegon says they should remain in place.
The ABI has previously insisted the restrictions should be left in place to ensure Nest remains focused on people with low incomes.
Speaking to Money Marketing, ABI director of life, savings and protection Stephen Gay says: “The industry is not standing in the way of pensions reform and we want savers to get good outcomes, so if it is the case the restrictions are preventing that then they should be removed before the 2017 review.
“If people are not getting access to good schemes as a result of those restrictions or those restrictions are standing in the way of pensions reform, such as a pot follows member automatic transfer system, they should be removed.”
Aegon regulatory strategy manager Kate Smith says: “We would like the Government to stick to the 2017 review timetable but we think they will look to bring it forward to 2014.”
Rowley Turton director Scott Gallacher says: “You cannot have an automatic transfer system for small pots without Nest. If the Government wants to do this before 2017 it will have to bring forward the review.”