Personal Pension  

Nest admits pot transfers could increase costs

John Taylor, managing director of customer and proposition of Nest, said allowing pension pots to follow members could result in additional costs that will be passed on to consumers.

Mr Taylor said: “Pot following the member, the objective behind that is really great. It is about trying to give people visibility of their entire pension and savings so that they can manage it effectively and understand their own trajectory - are they saving enough?

“Quite often, the problem at the moment is, they have fragmented pots in different places and they do not see their entire wealth. So, I think the objective behind pot follows member is a good one.

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“The implementation challenges though are very substantial indeed. We know that the cost of transferring pensions is very substantial, and can be in the order of £100.

“If that is the process that is replicated many, many times then it is going to become quite a cost to providers and potentially that may get passed on to savers at some point.

“There is a lot of work that needs to be done on the detail of pot follows member to make it a reality but I think the objective is a really good one.”

In a video interview with Financial Adviser’s Simoney Kyriakou, Mr Taylor also talks about the Nest contribution cap being lifted in 2017.

He said: “That is something we very much welcome. We know that employers tend to find the automatic enrolment legislation complex.

“If you are new to pensions it can be a challenge to automatically enrol. For those that are using Nest they then have the additional thing to deal with around the contribution caps.

“The fact this (contribution cap) is going to be removed gives employers a lot more certainty about what can be contributed to Nest.”

Click here to watch the video interview with Mr Taylor.