National Association of Pension Funds chief executive Joanne Segars says the Government will have to raise automatic enrolment contributions above 8 per cent of salary to ensure people save enough for retirement.
Following a three-month ind-ependent review of the mechanisms of auto-enrolment, inc-luding the Nest scheme, pensions minister Steve Webb confirmed that employees will contribute a minimum of 4 per cent of salary, with employers contributing 3 per cent and an additional 1 per cent coming from tax relief.
But Segars told delegates at an NAPF seminar last week that contribution rates would inevitably be forced upwards in the future. She said: “I have found very few people who think 8 per cent will be the final word. We all recognise the Government will have to go beyond 8 per cent at some point.”
Segars also said the NAPF’s proposal for so-called “super trusts”, where small, relatively high-cost pension schemes are merged to provide benefits of scale, could provide competition for Nest, which could eventually become the biggest defined-contribution scheme in the world.
She said: “We have got a good template in Nest but we want to see a little bit of competition from super-trusts.”