A Commons Select Committee inquiry has been launched by MPs to assess the progress made in the implementation of auto-enrolment following the changes made to pension rules.
The Workplace and Pensions Select Committee released its initial report two years ago into the progress made with auto-enrolment, and released a report examining improvements to governance and best practice in workplace pensions in 2013.
It was also announced that curbs on Nest, including the annual contribution limit and transfer restrictions, are to be lifted from October 2017 in order to allow greater competition with other UK providers.
Laurence Sanderson, of London-based advisers Sterling & Law, said, “The limits on Nest are very restrictive so it makes sense for them to be lifted. It is quite difficult for IFAs to recommend Nest in the form it is in now, but it will become a much more viable option once restrictions are lifted. It does have the benefit of being backed by the government.
“Part of the due diligence process when recommending a mastertrust is looking at the company structure, how long it’s been around, charging, investment options, what kind of track record it has, and if it has a financial strength rating.”
Nest was set up by the government as a to be a low-cost pension scheme focused on a target market of low to moderate earners and smaller employers.
Those enrolled currently cannot save more than £4,600 and are unable to transfer old pensions to the provider.
julia.faurschou@ft.com
