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Govt faces calls for independent body to control Nest

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The Department for Work and Pensions is facing calls to distance itself from Nest once the scheme’s restrictions are lifted in 2017.

Last week, pensions minister Steve Webb issued a ministerial statement confirming the Government’s intention to remove Nest’s £4,500 annual contribution cap and ban on transfers in and out in four years time.

Nest was set up by the Government specifically for automatic enrolment and is funded by a loan from the DWP. The scheme’s latest accounts, published in July last year, revealed it had received £171m in Government loans in total.

These loans are being paid back through a 1.8 per cent charge on members’ contributions.

The DWP also promotes Nest in a number of its auto-enrolment communications for employers and employees.

B&CE, the provider of auto-enrolment scheme The People’s Pension, says the Government’s control of Nest creates an “obvious conflict of interest”.

B&CE director of customer solutions Jamie Fiveash says: “The question we are asking is how is Nest going to be controlled? The DWP is naturally conflicted because it is setting policy and it wants Nest to be successful.

“We think it would be sensible for an independent body to be established to take control of things like Nest’s pricing.”

Aegon regulatory strategy director Steven Cameron says: “Now the Government has started to take steps to remove the Nest restrictions it is important any bias towards Nest is also removed sooner rather than later. 

“The Government and The Pensions Regulator should look at how they communicate Nest to employers and make sure that they do not overly influence their decision in selecting a scheme.”

Evolve Financial Planning director Jason Witcombe says: “I agree Nest needs to be controlled properly. It would be wrong to allow Nest to build up a monopoly position as a result of having an unfair advantage over private sector providers that do not benefit from a Government loan.”

A DWP spokeswoman says decisions about how Nest is communicated in light of the removal of its restrictions in 2017 will be made “nearer the time”.

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Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Julian Stevens 18th July 2013 at 5:21 pm

    It would have been so much easier and cheaper simply to stipulate that all companies employing upwards of five people must set in place a GPP with a provider of their choice.

    Minimum age 25 (though younger employees may join if they want).

    Contributions would be based on total earnings (none of this bollox about band earnings).

    Employers may choose their own scheme provider and negotiate the terms and mechanism by which their advisers are paid. Some schemes and some advisers may be cheaper than others, but so what? That’s free commerce in an open market.

    Adviser costs would be divided pro-rata between employer and employee.

    NEST would be entirely redundant and vast amounts of time and money would be saved all round.

    NEST’s most notable achievement so far appears to be that it allowed £1.44m to be stolen from its coffes and didn’t even notice it. That, I think, surely tells us something about the people running it.

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