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Nest plans partial withdrawals and bulk transfer restrictions

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Nest is consulting on plans to allow members to take partial cash withdrawals from their pot as part of a raft of changes at the Government-backed pension scheme.

The pension freedoms introduced a new ‘uncrystallised funds pension lump sum’ withdrawal option which allows savers to take chunks of money from their fund, including tax-free cash, without entering drawdown.

Nest currently only allows members to take their entire pot as cash but from September the scheme will introduce partial UFPLS.

This could be subject to restrictions, however, to “act in members’ interests” and allow for “cost and administrative workability”.

These restrictions could include:

  • limiting partial withdrawals to those pots over a certain value;
  • requiring any remaining value of the retirement pot not to fall below a fixed level;
  • limiting the frequency of withdrawals.

The scheme is also considering allowing members below scheme retirement age who take their entire pot as cash but continue to receive employer contributions the option of leaving their account open.

In addition, Nest is consulting on amending its rules to take account of the proposed lifting of its restrictions from 1 April 2017.

The restrictions, imposed as part of a deal struck with the insurance industry when Nest was created, block individual transfers in or out and cap annual contributions at £4,700.

While Nest will have a statutory obligation to accept individual transfers in from April next year, this is not the case for bulk transfers.

Nest is proposing to allow bulk transfers out but is considering changes to its rules so protected pension ages and lump sums do not apply when a bulk transfer in takes place.

It says allowing this would be “extremely complicated to administer” and building the functionality to deal with it would be “expensive”.

It says: “Such expense is unlikely to be in the interests of the membership as a whole given the likely numbers of people with such protection.”


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  1. “It says allowing this would be “extremely complicated to administer” and building the functionality to deal with it would be “expensive”.”

    I can just imagine the hysteria if a Life Company said this.

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