The National Employment Savings Trust could be hugely overestimating the size of its target market, according to Standard Life.
The scheme, which will launch in low volumes next year, is being prepared on the assumption that membership will fall between two million and six million once all employers are subject to automatic enrolment.
Nest chief executive Tim Jones says: “At the end of staged introduction, we anticipate there will be between two and six million contributing members of Nest.”
Standard Life head of pensions policy John Lawson claims the company’s own calculations estimate a potential market for Nest of just two to three million, although a high opt-out rate could see membership fall to as low as one million.
Lawson says: “As a result of the minimum threshold going up to £7,500, we will want to enrol the 4.8 million non-joiners who are currently working for employers that have an existing scheme with us because they are more attractive to us now.
“This might leave big questions for how Nest’s finances stack up. If it gets a big opt-out rate, say, 40 or 50 per cent, then it is only going to get 1-1.5 million members.”
Jones says: “We define Nest’s viability as the ability of the scheme to become self-financing while providing consistently low charges to members. We are confident this is achievable. Our estimates reflect the latest data and evidence available. The estimates will be regularly updated as new evidence emerges.”