The Government is holding talks with product providers to investigate the possibility of scrapping the National Employment Savings Trust and making it profitable for the private sector to fill the gap.
Money Marketing understands the talks are taking place as part of the Government’s review of Nest, which is due to report next month.
The Government could save £575m over 10 years if it chooses not to go ahead with the second stage of the contract with Tata in October.
A source close to the matter says: “The Government is looking for a model that does not involve public spending commitments and is considering lateral ways of delivering this.”
Another source told Money Marketing: “There is a desire to find ways to save money and there is quite a big potential bill around Nest. If there are other ways of tackling it the Government is up for them.”
Lansons Public Affairs and Regulatory Consulting director Richard Hobbs adds: “I hear the review is becoming more radical as time goes on. There is a growing feeling that Nest is under a lot more scrutiny than was previously implied by the Government.”
Last October, Money Marketing revealed that a consortium of leading life offices had been established to draw up a plan B alternative to Nest for the Conservatives.