Restrictions detrimental to members and employers and should go by next year, says NEST

Analysis of the impact of the restrictions on transfers and the contributions limit on both employers and members suggests there is a strong case for removing them by 2014, NEST said today.

Drawing on research and evidence from employers, members and the private pension market, it concludes the restrictions should be lifted for two reasons:

• to remove complexity and administrative burden for employers, particularly in 2014 as the volumes of employers being staged in increases significantly, and to give them freedom to choose NEST as a single, straightforward route to compliance if that is what they want to do  

• to allow NEST members to take the active decisions about their retirement saving that other consumers enjoy, such as increasing contributions to meet their retirement aspirations and consolidate the pension savings into another scheme or into NEST as they progress through their working career.

NEST chief executive, Tim Jones, said ‘NEST and the pensions industry as a whole needs to pull out all the stops to make a success of automatic enrolment as the volume of employers being staged rises exponentially in 2014. NEST’s restrictions complicate the decision-making process of medium-sized employers, many of whom will experience a private pensions sector already busy supporting other clients and who will therefore look to NEST as a potential provider. Removing the restrictions will help us help those employers to get the job done.’

NEST Chair, Lawrence Churchill added ‘The most important consideration for the Trustee is the impact of the restrictions on our members and our potential members. Our experience to date suggests that the restrictions already impact negatively both on employers and members, by restricting choice and preventing members from growing their pots as they might wish to. These unique restrictions prevent NEST members from consolidating existing pots, or adding to their contributions to make up for lost time and cause employers additional complexity.’

The report argues that the restrictions on transfers and the contribution limit can be lifted without being detrimental to private market provision because of the other unique elements  of NEST’s framework, such as its public service obligation, fixed price and inability to offer any products beyond an automatic enrolment pension scheme.

Read NEST Corporation's response on Supporting automatic enrolment (PDF)

NEST Members’ Panel and Employers’ Panel submissions

Given the relevance of the restrictions to both members and employers, the Trustee invited both the NEST Members’ Panel and the NEST Employers’ Panel to provide advice to the Trustee on their impacts and agreed that their submissions should be publically available.

More information about the work of both Panels is available at www.nestpensions.org.uk/panels  

Read NEST Members' Panel response on Supporting automatic enrolment (PDF)

Read NEST Employers' Panel response on Supporting automatic enrolment (PDF)