B&CE, operator of the government-backed National Employment Savings Trust’s major auto-enrolment rival, has warned of “conflicts of interest” that will threaten competition in the nascent market and demanded transparency over transfer pricing at the state-backed provider.
Yesterday, the government announced that it will be scrapping the contributions cap which previously limited how much people could pay into the Nest.
Jamie Fiveash, director of customer solutions at B&CE, provider of The People’s Pension, welcomed the move, but warned continued conflicts will allow a “heavily subsidised state-backed provider” to have “free reign” of the pensions market and therefore “should not be taken lightly”.
In particular, he said: “It is not clear, based on Nest’s current two tier charging structure, at what charge Nest will take in transfers and how will this pricing be controlled?”
He also questioned whether the Department for Works and Pensions should continue to oversee Nest after the final employer staging dates are reached in 2017, saying this could harm competition.
Mr Fiveash said: “Whilst it is understandable why the [Department for Work and Pensions] should control Nest’s role during automatic enrolment, we would question whether the body that prescribes pensions legislation, and is responsible for Nest’s long-term success, should remain in charge of its oversight and operation in the market beyond 2017.
“There is an obvious conflict of interest, which would ultimately result in unfair competition. For these reasons, European legislation on competition and state aid could still prove problematic.”
Mr Fiveash has also urged the government to continue to strive for “improved quality” in pensions.
He said: “With tens of thousands of smaller and medium sized employers starting to automatically enrol their workers from next year, we must lay the framework for success.
“To meet this challenge, we support establishing a recognised quality mark for schemes, increasing the barriers to entry for trust-based schemes, simplifying the current legislation and standardising pension scheme charges.”
The government’s decision to scrap Nest caps has been broadly welcomed by industry commentators, despite some saying its slow implementation date could put savers at a disadvantage.
Separately, B&CE has also appointed Darren Philp as head of policy, effective from October 2013. Mr Philp joins B&CE from the National Association of Pension Funds where he currently leads the Napf’s policy and advocacy activities.
He said: “With the roll-out of auto-enrolment there is a real chance to revive trust and confidence in our pensions system. As an industry, we need to put the saver at the heart of everything we do.
“The People’s Pension has developed a market-leading product which does exactly that. I hope to be able to continue to contribute to the considerable work already done so far in developing the proposition that is easy for employers and puts the member first.”