The National Employment Savings Trust has argued that there is a “strong case” for removing restrictions on bulk transfers and the annual contributions limit by 2014, following its analysis on the impact that the restrictions have.
In Nest’s response to the government’s call for evidence on supporting auto-enrolment, Nest said that drawing on research and evidence from employers, members and the private pension market, the restrictions should be lifted for two reasons.
First, lifting the restrictions would remove complexity and administrative burden for employers, particularly in 2014 as the volumes of employers being staged in increases significantly. This would also give them freedom to choose Nest as a straightforward route to compliance if that is what they want to do.
Second, it would allow Nest members to take the active decisions about their retirement saving that other consumers enjoy, such as increasing contributions to meet their retirement aspirations and consolidate the pension savings into another scheme or into Nest as they progress through their working career.
However, Steve Webb, pensions minister, said in a Work and Pensions Committee evidence session on 23 January, that although the government is “open” to lifting restrictions, legal advice has said that evidence will be needed to do so.
He said the Nest restrictions will not be lifted until there is evidence that shows that restrictions on annual contributions and block transfers are detrimental to consumers.
Mr Webb highlighted that the government is out “talking to firms and industry to see what is in the pipeline and getting early intelligence” but they cannot make a case to the commission stating that there “may be a problem” if nothing has actually changed.
Tim Jones, chief executive at Nest, said: “Nest and the pensions industry as a whole needs to pull out all the stops to make a success of automatic enrolment as the volume of employers being staged rises exponentially in 2014.
“Nest’s restrictions complicate the decision-making process of medium-sized employers, many of whom will experience a private pensions sector already busy supporting other clients and who will therefore look to Nest as a potential provider. Removing the restrictions will help us help those employers to get the job done.”
