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Pension firms accuse Nest of stepping outside remit

Two major pension providers have accused Nest of stepping outside its official remit to compete for business from big employers.

Nest was established as part of the Government’s automatic enrolment reforms because private providers were unable to profitably service small employers.

It is the only scheme which has a public service obligation to accept any employer that wants to use it.

Legal & General pensions strategy director Adrian Boulding was one of three people who independently reviewed auto-enrolment and Nest in 2010.

He says: “We consistently come up against Nest in beauty parades when we tender for companies, so it is seeking to compete in areas of the market we had not anticipated.

“Nest was intended to fill the gap and pick up the employers that would otherwise have difficulty in finding a pension scheme. I do not believe any of the really big companies with early auto-enrolment staging dates have any difficulty in finding a private sector pension provider but that is who Nest is competing for.”

Earlier this year, B&CE opened its doors to members outside the building and construction industry by launching The People’s Pension.

Patrick Heath-Lay, who will become chief executive in October, says: “Our understanding of Nest’s role and objectives when the scheme was formed was that it would be largely passive, providing an open door to anyone who needed a good quality, low-cost scheme.

“In reality, what we see is Nest being very active in the market and quite aggressive in hunting for business, even where good quality provision already exists.

“It was Nest’s activities, even before the independent review took place, which led us to launch The People’s Pension because we had to respond.”

The comments follow a work and pensions select committee report calling on the Government to lift Nest’s restrictions “as a matter of urgency”.

The Government-backed scheme is currently constrained by a ban on transfers in or out and a £4,200 contribution cap. The restrictions are due to be reviewed in 2017.

Committee member and Conservative MP Brandon Lewis says the Government should review the restrictions in 2013, when the scheme has been operational for a year.

AWD Chase de Vere head of communications Patrick Connolly says: “Nest has to attract money, so it is not surprising that it is going out and actively competing for business from big employers.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. It is disingenuous of L&G and B&CE to claim they are both unaware they were going to be competing with NEST directly for the larger employers. Given that Boulding was part of the ‘making automatic enrolment work’ review team, it is difficult to see how he couldn’t know about NEST’s funding and business model.

  2. Whats the worry from L&G? If there business model gives price competitiveness and a better post sale service than NEST then business will continue to prosper for the larger employers who see the bigger picture than conformity to employer duty.

    Its just a competitor…….deal with it.

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