The People’s Pension has called for an independent body to take responsibility for overseeing the pensions market, as it tells the government to provide more clarity on removing the National Employment Savings Trust’s annual contribution limit and transfer restrictions.
At the start of October the government launched a consultation, which closed yesterday (29 October), around its intention to remove the restrictions on pension schemes held with Nest.
As part of its response to the consultation the People’s Pension stated that while the market has known for some time that removing restrictions has been its intention, there are still “some fundamental, yet unanswered” questions about the impact of this decision.
Darren Philp, director of policy and market engagement at The People’s Pension, stated that while the market has known for some time that removing restrictions has been its intention, there are still “some fundamental, yet unanswered” questions about the impact of this decision.
“We need to know whether Nest’s 1.8 per cent upfront contribution charge will be levied on pots transferring into Nest.
“If it is, then this disadvantages members. If it isn’t, then this provides Nest with an unfair advantage, made possible through its government funding.”
Mr Philp said that the core problem is that the government has responsibility for oversight of the pensions market in general, while also having a significant financial stake in one provider.
“Although we appreciate that the Department for Work and Pensions has strived for neutrality, inevitable tensions will arise where there is such a conflict. It underlines the need for an independent body – which we are calling OFPEN – to take responsibility for overseeing the pensions market.”
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 constraints, including an annual contribution limit and restrictions on transfers.
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.
peter.walker@ft.com
