Small businesses are likely to default to using Nest because they fear other auto-enrolment schemes may not be suitable for their employees in the long term, according to the British Chamber of Commerce.
At a Work and Pensions select committee hearing last week, BCC director general John Longworth said small firms will be attracted to the simplicity of Nest.
He said: “I suspect a lot of small businesses will head for the Nest scheme because it is the simple option. A lot of them have not done this before and they will genuinely worry that they are not giving employees the best option and employees will come back later and say ’You gave us bad advice’.”
Trades Union Congress head of campaigns and communication Nigel Stanley told MPs that employers should take advice about auto-enrolment from IFAs or employee benefit consultants but warned they should be aware of the possible costs.
He said: “I am not saying there is a massive abuse there but the history of pensions shows there are incentives that distort behaviour and can mean employees will not necessarily get the best deal.”