Pensions minister Steve Webb has attacked some advisers for “dissing” Nest and pushing clients towards schemes that pay commission.
Speaking at a Smith Institute fringe event at the Liberal Democrat conference in Brighton yesterday, Webb responded to a comment from the Federation of Small Businesses claiming advisers are choosing pension schemes based on commission and not client needs.
Webb said: “I was interested in the comment on IFAs. I have found some of the same things, employee benefit consultants have gone around dissing Nest because they do not get the commission. Nest would be very suitable for many small and medium-sized firms but the IFAs and employee benefit consultants are not doing it. We need to make sure that employers make sure the default option is good value, not-for-profit, with low charges. If it is not working and the market structure does not drive down charges then we will have to regulate.”
Nest managing director of scheme development Helen Dean says the provider does not share Webb’s concern.
She says: “I am glad to say that many are recommending us wholeheartedly to their customers. We are working with a large number of advisers and increasingly, our experience is that the advisory community is attracted to our low charges, simple clear communications and sophisticated investment strategy.”
AWD Chase de Vere head of communications Patrick Connolly says: “In the past some GPPs were sold for the wrong reasons but I do not think that is the case any more.
“Nest has its good points but it is not the right solution for many companies. The problem for smaller companies is they need more support than Nest is going to provide.
“Employers should not walk blindly into Nest assuming it is the right solution because often it will not be.”
Webb also dismissed speculation that state pension reforms are being watered down, pledging to release a white paper in the autumn. Reports earlier this month suggested prime minister David Cameron wanted a rethink of plans to create a flat-rate state pension of £140 a week.
Webb said: “It is absolutely still our intention. It is an odd story saying the prime minister is demanding a rethink because if he is then he has not told me and we are still on track for our autumn white paper.”