Labour has warned the Government any delay in scrapping Nest’s restrictions will put the success of automatic enrolment at risk.
Earlier this month, the Department for Work and Pensions published a call for evidence on Nest’s restrictions following calls to scrap them ahead of a planned review in 2017.
The Government-backed pension scheme is currently shackled by a £4,400 annual contribution limit and a ban on transfers in and out.
In March, the work and pensions select committee called for Nest’s restrictions to be removed “as a matter of urgency” so it can compete more widely. However, in its response the Government said such a move could breach EU state aid rules.
In a paper written by Dr Andy Tarrant, Shadow pensions minister Gregg McClymont’s senior parliamentary assistant and an qualified EU competition lawyer, Labour argues that the Government only needs to prove that removing the restrictions early would be a “reasonable step” given the information available.
Tarrant says: “The evidence available today is that the restrictions are impeding Nest’s ability to act as a service of general and economic interest.
“It would not be in the public interest for the UK authorities to unilaterally adopt a higher standard of proof and to choose to wait until they can prove beyond any reasonable doubt that the restrictions damage Nest’s ability to meet its public service obligation.
“By that time, many employees would already have been signed up to pension schemes that are not in their best interests and Nest may struggle to achieve the necessary scale to minimise its cost to members.”
McClymont (pictured) says: “We have repeatedly called for these restrictions to be lifted. They need to be lifted as soon as possible so that savers and employers alike get the greatest benefit from the new workplace pensions.
“Ministers should take our analysis on board and Labour will be working to ensure that the Government moves to effective action.”