Nest’s contribution cap and transfer ban will be lifted in 2017, the Government has announced.
Pensions minister Steve Webb has today published a written ministerial statement setting out plans to remove the £4,500 annual contribution cap and ban on transfers in and out of the scheme in four years time.
He says: “In line with the recommendations of the independent Making Automatic Enrolment Work review, I intend to legislate as soon as Parliamentary time allows to lift the contribution limit from 2017.
“This will give employers the certainty they need that Nest will continue to be an appropriate scheme for them and their workers when minimum contributions rise, or should they choose to contribute more.
“With regard to individual transfers, we agree that Nest should be part of the automatic transfer solution for which we are currently legislating.
“Therefore we intend to lift the restrictions on individual transfers in and out of Nest to coincide with the start of the ‘pot-follows-member’ regime.
“The ban on bulk transfers will remain in place until the end of the main roll out period for automatic enrolment in April 2017, when it will then be lifted.”
Nest managing director of product and operation Helen Dean says: “We are pleased the Government has decided that from 2017 members and employers will be able to use Nest as they would any other pension, with no specific restrictions on the amount they can contribute or the ability to transfer in and out.”
Association of British Insurers director general Otto Thoreson says: “This is a sensible way forward which will command the support of the industry.
“Automatic enrolment has been a success story so far thanks partly to the strong partnership between insurers and Nest. We look forward to building on this as we focus on the critical challenges of encouraging people to stay enrolled and save more.”
Trade union the TUC says it is “disappointed” the transfer ban will not be lifted sooner.
TUC general secretary Frances O’Grady says: “Any employer can now confidently choose Nest as a single supplier as the contribution limit will end just as full contributions are payable under the phased introduction of auto-enrolment.
“Despite the strong lobby to keep Nest restrictions from some commercial providers, the minister has come down on the side of consumers.
“But we are disappointed that the ban on pot transfers is not happening more quickly. We would have preferred an early date to help those who move jobs, as well as Nest members with pots from earlier savings in poor legacy schemes.”