A call for evidence on the impact of two statutory constraints on the National Employment Savings Trust (NEST), one of the pension schemes employers can choose for automatic enrolment, is published today.
The Government is seeking views and evidence on whether the annual contribution limit and transfer restrictions on NEST are influencing employers’ choice of automatic enrolment scheme in a way that was not intended. NEST has a public service obligation to ensure that everyone eligible for automatic enrolment can access a low-cost pension scheme. It has been designed to target low to moderate earners, smaller employers and firms with a high turnover of staff who were not served by the existing market. Steve Webb, Minister for Pensions said: “We are already seeing the positive effect that NEST is having on the world of pensions. Workers are being signed up for workplace pension schemes at much lower charges than in the past and firms have much more choice of provider than in the past. But we need to make sure that this continues as automatic enrolment moves on to smaller firms and that the constraints on NEST are not a barrier to good consumer outcomes”.
The Work and Pensions Select Committee recently concluded that the annual contribution limit and the transfer restrictions on NEST may prevent the not-for-profit scheme from servicing market failure. The Committee recommended that the Government should remove them. But the evidence available is not conclusive and the Government doesn't want to propose any changes without understanding their impact. The Government is seeking evidence and views of employers, industry, consumers and their representatives and will consider them fully before deciding on any action.
