The government has confirmed it intends to remove the annual contribution limit and transfer restrictions on the National Employment Savings Trust from April 2017.
In a written statement this morning (8 September) the minister for pensions Steve Webb said the Department for Work and Pensions will launch a short technical consultation on draft legislation this autumn, to remove the annual contribution limit and the bulk transfer restrictions.
“We also retain the option to remove the individual transfer restrictions from 1 October 2015,” he added.
Nest receives state aid as it has a public service obligation to accept any worker automatically enrolled by their employer.
To balance any competitive advantage there are a number of constraints including an annual contribution limit and restrictions on transfers.
In its response to the call for evidence on the impact of the annual contribution limit and the transfer restrictions on Nest, the government confirmed its intention to lift these constraints in April 2017.
Since then, the European Commission has considered and approved the modifications to the state aid case for Nest.
Tim Jones, chief executive of Nest, said: “This is welcome and timely confirmation that the restrictions on contributions and transfers will be removed by 2017, particularly with automatic enrolment now starting to affect medium and smaller employers.
“Removing the cap on contributions by April 2017 means that the cap will be gone before minimum contributions increase from their current level (2 per cent) to 5 per cent.
“That not only simplifies things for employers, but also helps Nest members in building up their pots in the longer term.
“Nest remains critical to delivering the automatic enrolment policy, fulfilling its role as the provider with a public service obligation to be open to any employer to use.”
