The Government is planning to allow national pension scheme Nest to offer its own in-house retirement products and remove restrictions on who can join.
In a call for evidence published today, the Department for Work and Pensions outlines potentially radical changes to the scheme.
It says: “The Government wants to understand the potential opportunities and the risks of amending legislation to give Nest – like other pension schemes – the ability to offer more flexible decumulation services.
“Without change, as other pension schemes develop and adapt their offerings, Nest members will not have the same opportunity as others to benefit from the pension reformrs, without making the active choice to cahnge scheme.”
It notes Which? research that warns people with smaller pots may struggle to access some products, including drawdown, that are designed for wealthier people.
The DWP is also considering changing rules to allow more people to join the scheme.
Currently individuals cannot save into Nest without being employed by a firm that has picked Nest, having self-employed status or via a pension sharing order.
The DWP says: “There may therefore be a case, as we come to end of the roll-out of automatic enrolment, to open up access to Nest for individuals, helping to maximise consumer choice.”
It adds opening up access “may also better support the deliver of the freedom and choice reforms”.
Restrictions on annual contributions and bulk transfers in are already due to be lifted in April 2017.
Nest is the largest auto-enrolment provider in the UK with over 3 million members.
The consultation closes to responses on 28 September 2016.
Nest chair Otto Thoresen says: “We welcome today’s call for evidence, and its focus on enabling NEST members to achieve good retirement outcomes in the new freedom and choice world. As Trustee of a pension scheme with over 3 million members, we believe we have a duty to ensure our members can access their money in ways that work for them.
“Nest was set up in a world where most of our members were compelled to annuitise. Nest now needs the flexibility to develop and deliver different approaches, to give our members real choice within the new freedoms and to recognise that working patterns are changing fundamentally.
“Allowing savers to continue contributing and drawing from their pension pots within a trust-based framework, providing guidance and support for accessing retirement products within schemes and from the open market will be key to promoting confidence in saving and promoting confidence in retirement.”