Nest under fire over manual direct debit system

Helen Dean, Nest

Government-backed scheme Nest’s method for collecting contributions is under fire for making auto-enrolment “as difficult as possible for SMEs”.

Before pension contributions are sent to Nest, employers must manually approve payments each month despite direct debit arrangements being in place.

The scheme says this allows employers to know exactly how much they will pay.

However, rival provider Now: Pensions does not have the same requirement. An email is sent to firm prior to payments being taken but no pre-approval is needed.

Syndaxi Financial Planning managing director Robert Reid says: “Usually the provider receiving the money just takes it.

“I’d love to know why Nest has adopted a process no one else uses – are they trying to make it as difficult as possible for SMEs? There’s the potential for two things. One, some people won’t realise they need to do this, and, two, there’s the temptation not to press the button and save some money for a while.

“Then you could get the problem that the money has been deducted, but it has not be transmitted, and then the company goes bust. What are they going to do then?”

Nest executive director of product and marketing Gavin Perera-Betts says: “Our approach means our customers control the timing and amount of their payments before we collect the money.

“We recognise that the given amount collected each month is likely to fluctuate. With our approach, employers know exactly how much they’ll pay.

“We’ll collect the amount our customers confirm they’d like to pay when they click ‘Make payment’ on their contribution schedule from their online Nest account.”