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MPs call for immediate end to Nest restrictions

Anne Begg

The work and pensions select committee has called for an immediate end to Nest restrictions.

In a report into lifting Nest restrictions, published today, the WPSC says Nest must be more widely available for auto-enrolment to work successfully.

The scheme is currently limited to payments of £4,400 a year while transfers in and out are banned. The reason is to keep the scheme focused on its target market of low paid employees.

The Government launched a call for evidence as part of a consultation on removing the restrictions in November while Labour is campaigning to have them removed.

In its 2012 report into auto-enrolment the WPSC called for also called for an end to Nest restrictions as a “matter of urgency”.

WPSC chair Anne Begg says: “Since auto-enrolment began, the case for lifting the restrictions has become even more powerful, and the need for action more pressing.

“For auto-enrolment to continue to work successfully, Nest must be allowed to thrive.”

Begg says employers are “dismissing” Nest as an option because of its limitations creating a risk that some will lose out.

She says; “Nest is required to be a low-cost scheme and to offer good value. Other pension providers don’t have this same obligation. There is therefore a risk that the restrictions will mean some employees are prevented from having access to the best value pension scheme available.”

The report also highlighted the importance of lifting Nest restrictions on transfers if the Government’s “pot follow member” plans are to be successful.

The pressure is mounting on the Government to act as Nest called for end to its restrictions in 2014 and the Association of British Insurers softened its opposition last week.

Saga Group director-general Ros Altmann says it is “vital” restrictions are lifted as soon as possible.

She says: “The private pensions industry was very successful in lobbying to prevent Nest from competing too hard for the most profitable pensions business. The restrictions that were imposed to protect private providers have resulted in Nest being unable to compete properly in the market.”

A Department for Work and Pensions spokesman says it welcomes the contribution of the WPSC and will publish the results of its consultation in the spring.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Why?

    Are they now realising that it is a white elephant and are trying to compete with the private sector – backed by tax payer subsidies.

    And who will be respsonsible for advice on these transfers?

  2. Dame Anne Begg MP states “……the restrictions will mean some employees are prevented from having access to the best value pension scheme available”, this gets to the route of the issue. The assumption that NEST is “the best value pension scheme available” is a completely ridiculous statement. What she really means is that it may be cheap, but as we all know best is not always about cheap! At the end of the day if our role was to purely pick the cheapest option for our clients’ pensions and investments then the compliance checks would be unnecessary as we would purely need a cost comparison tool. Its about what is best for the client, not what is cheapest. When is the hypocrisy at government level going to stop! I think its a godsend that some employees will not have access to the scheme, they will no doubt look back in years to come and count their blessings!

  3. I always thought that the EU prevented this given the funding NEST received from government. or this why we are thinking of leaving Europe………….

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