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Nest review suggests contribution cap should be scrapped in 2017

The Government could remove the £3,600 Nest contribution cap in 2017 following a recommendation from the auto-enrolment independent review team.

In it’s final report, David Yeandle, Paul Johnson and Adrian Boulding told the Department for Work and Pensions legislation “should make clear” that the cap on payments into Nest, which is based on 2005 prices, will be removed when all employers have been phased in.

Institute for Fiscal Studies research fellow Paul Johnson, who led the three-man review team, says: “The cap should be kept uprated until 2017. After that, there is a case for removing it. It is important the Government does not give the impression that £3,600 is enough.”

However, Standard Life head of pensions policy John Lawson (pictured) argues the limit, which he says will be about £5,000 when the scheme is up and running, is “largely irrelevant”.

He says: “If you look at the best contribution rate of 12 per cent, you’d have to earn well over £40,000 to reach the limit. The vast majority of people will be under the limit.”


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There is one comment at the moment, we would love to hear your opinion too.

  1. Jennifer Nicholls 27th October 2010 at 4:58 pm

    Well my kids could have worked that one out. When will they take proper advice from us, people who work in the industry.

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