Nest hits back over AWD criticism
The National Employment Savings Trust has defended itself from criticism by adviser company AWD Chase de Vere that it will not be the best default option for savers.
Jon Dixon, corporate advice manager at AWD Chase de Vere, voiced concerns that charges for clients could be higher than expected for Nest, due to the possibility of the corporation taking longer to repay its establishment loan than planned.
He also claimed Nest provides little in the way of support, which could push up costs for employers.
In addition, Mr Dixon argued that alternative providers are not limited by contribution amounts and can accept transfers into and out of their schemes.
Mr Dixon said: “We are fully supportive of auto enrolment and the real need to get home the message that ‘tomorrow is worth saving for’, but we are wary of recommending Nest to many of our clients.
“Nest wants to be the default pension scheme but instead is in danger of becoming the default scheme for the unadvised and unaware employer.”
“The bottom line is that Nest needs to change if it wants to compete with both new-wave and traditional pension providers.”
In response to AWD’s criticisms Tim Jones, chief executive of Nest, said: “The comments from AWD Chase de Vere don’t reflect Nest’s experience.”
“The response we are getting from employers is very good and we are very confident we will be used by a large number of employers. We already have around 30 very large employers committed to using Nest in the first six months of staging.”
He added that Nest is designed for people who currently do not have access to a workplace pension and tend therefore to have lower salaries than people currently in workplace pensions and are unlikely to have previous pension pots to transfer.
“Whilst some employers have told us that the restrictions are causing difficulties, others are reporting that their workers won’t be affected, in the short term at least.”
He added that research by the corporation suggests 21 per cent of employers with 5,000 or more workers in the private or not-for-profit sectors are ‘quite likely’ or ‘very likely’ to use Nest for some groups of workers.