Legal & General pensions strategy director Adrian Boulding says scrapping the transfer bans and contribution cap from Nest would see the scheme distracted from its key focus of small firms and low-earners.
To comply with European state aid rules relating to the Government loan to set up the scheme, transfers into Nest were banned. Nest’s own rules added a ban on transfers out and an annual contribution cap of £4,200.
Giving evidence to the work and pensions select committee last week, Boulding said the restrictions keep Nest focused on small firms and low-earners, who are not well served by private providers.
He said: “Those two restrictions make it difficult for Nest to compete in the marketplace in areas of high-earning individuals and those wanting to transfer money from existing pension schemes, which were areas already well catered for by the private sector.
“If they were to be lifted, I fear Nest would be distracted from where it has real social purpose and wander off into other areas of the market.”
He added that transfer bans should be kept in place until the portability of pension pots improves.
He said: “When we have the legislation that makes that happen, I would be very happy for employees to take their pot to Nest and then take it from Nest to the next employer.”