Nest is holding discussions with the FSA over the possibility of applying the RU64 rule to the Nest auto-enrolment scheme.
The RU64 rule states that advisers recommending a pension that is not stakeholder have to explain in writing why the recommended policy is “at least as suitable as a stakeholder pension.”
Speaking at the Tenet annual business conference in Ascot last week, Nest head of intermediary distribution Roy Porter said: “Our chief executive has talked to the FSA about applying the RU64 rule to Nest. As far as Nest is concerned, we are looking at a very simple, transparent online proposition.”
Standard Life head of pensions policy John Lawson says: “Nest is a very basic scheme. If we were selling a group personal pension in the market to satisfy auto-enrolment rules, we might typically tailor that to suit their employees. Therefore, it is unrealistic to say that Nest would be more suitable.
“We also have to remember that Nest is an untested supplier. It would be rich to ask advisers to consider whether what they were recommending is more suitable than Nest when Nest does not even exist today and we do not yet know what it looks like.”
Tax Incentivised Savings Association director of policy Malcolm Small believes that the RU64 rule was retained at least in part with a view to it being applied to Nest.
But he says: “I am slightly nervous about looking across two pension architectures, from contract-based regimes to occupational regimes, by way of RU64.”
The Retirement Adviser director Nick Flynn says: “Nest could be a sensible benchmark but I think to impose the RU64 rule would be a bit excessive.”