Call to ease rules on low-cost
pension scheme

Age UK, Which?, the Federation of Small Businesses (FSB) and the TUC are among those who have written to Pensions Minister Steve Webb calling for the restrictions on Nest (National Employment Savings Trust) to be relaxed.

The groups said barriers on Nest imposing maximum annual contributions and banning transfers in and out of the pension scheme will cause problems for employers and workers as the Government’s pension saving reforms are rolled out.

Up to 10 million people will eventually be automatically enrolled into workplace pensions under the Government’s efforts to tackle the pension savings crisis.

Automatic enrolment began last autumn with larger firms, but concerns have been raised about how smaller companies will manage under the changes.

Nest was introduced as a low-cost, not-for-profit option to fill gaps in the existing market.

The letter says that many employers will be unable to use Nest as a single pension for their whole workforce and could be forced to juggle more than one scheme, adding to their costs.

The restrictions also prevent workers from maximising their savings by piling up larger amounts of cash in their pension as they approach retirement, the letter argues.

It says: “The big employers most attractive to the pensions industry in the early waves of auto-enrolment have already decided on their supplier.

“It is only right that small and medium-sized employers are safe in the knowledge that, should they choose Nest, they and their employees will not be at a disadvantage.”

Mike Cherry, national policy chairman of the FSB, said: “Nest was intended as a low-cost default scheme targeted at small businesses and their employees, who have not been well-served by the pensions industry.

“The restrictions on contributions and transfers placed on Nest will place unacceptable burdens on small firms, who could find themselves having to juggle more than one scheme to accommodate their workforce, and will hit savers.”