Pensions minister Steve Webb says he is “reflecting” on whether or not to remove restrictions placed on the National Employment Savings Trust.
Transfers in and out of Nest are banned and annual contributions are capped at £4,200. The restrictions were due to be looked at again in a review in 2017. With the delay of auto-enrolment for smaller firms it is now unclear when that review will go ahead.
Speaking at work and pensions questions in the House of Commons this afternoon, Webb said the restrictions on Nest were put in place to ensure the scheme focused on low to middle income earners.
He added: “The situation has moved on, competitive developments in the market have emerged which were not necessarily foreseen, so we are certainly reflecting on the role of those constraints.”
He was responding to a question from Shadow pensions minister Gregg McClymont who said the restrictions should be looked at because the country is facing a private pensions “crisis” with 60 per cent of people saving nothing for retirement.
Political pressure has been growing over pension charges with Labour leader Ed Miliband threatening to push for them to be capped if they do not fall and tens of MPs signing a Parliamentary motion calling for “urgent action” to be taken to lower them.
Webb told MPs that he is “encouraged” by the low charges being announced by Nest’s competitors, but added that his department was ready to use cap charges on auto-enrolment schemes if necessary.
He says: “At the moment our judgement is that the early roll out of auto-enrolment will be the big firms who will get good deals and good charges. We have more competition than perhaps was expected. Nest is coming in at 0.5 per cent, others in some cases are coming in below that.”