PensionsOct 9 2014

Government confirms Nest restriction consultation

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by

The government has launched a consultation today (9 October) around its intention to remove the annual contribution limit and transfer restrictions on pension schemes held with the National Employment Savings Trust.

The plans were revealed in early September when pensions minister Steve Webb made a statement about the Department for Work and Pensions’ intentions to remove all restrictions on Nest from April 2017.

The consultation, which runs until 29 October 2014, is seeking views from legal advisers, pensions industry professionals, trustees and scheme managers on the draft statutory instruments that will remove the restrictions.

As previously reported, 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.

The move will help the staff of more than 8,900 employers, which currently administer their pension schemes through Nest, to save more than the current £4,600 a year cap allows.

Workers will also gain the same transfer rights as members of other schemes, helping them to consolidate their savings if they wish.

Having secured the support of the European Commission for the changes, following a year of negotiation over whether or not broadening the state-backed scheme would constitute ‘state aid’, the government intends to lay legislation before parliament in the new year.

Mr Webb stated: “While these constraints were essential as we got auto-enrolment up and running, their removal will ensure that in future people saving with Nest get the same rights as members in other schemes and can make the most of their savings.

“Removing the contribution limit will help people save more, while lifting the ban on transfers will help people to build up worthwhile pension pots in one place and get better value for their savings.”