Pension providers have told MPs to lift restrictions on the National Employment Savings Trust (Nest) after it has cleared financial and administrative hurdles.
Giving evidence to the Work and Pensions Select Committee providers Fidelity, Partnership, Scottish Life, and Phoenix Group said there was justification for removing the restrictions on Nest- there is currently a ban on transfers and a contribution cap- under certain circumstances.
Ronnie Morgan, strategic insight manager at Scottish Life, told MPs: ‘Nest was set-up because of a supply side failure. Because of that the Nest restrictions should stay on until 2017. We couldn’t supply a solution to everyone. It would take a lot of skilled people away from the government’s policy. Getting employers enrolled.
‘Only [in 2017] will Nest have a track record. Until we have explored this market we should leave them on. It is really expensive and time consuming getting people on board a pension scheme. Nest will certainly have a significant problem getting these people on board [as] it’s a massive challenge already.’
Richard Parkin, head of proposition, defined contribution and workplace savings, Fidelity, said if the government implemented plans for automatic transfers of small pension pots it would have to remove the Nest transfer ban, but only for automatic transfers.
Partnership chief executive Steve Groves added: ‘The industry has not been very good at serving customers will small and average pots. The restrictions were put in there because of government subsidy and that’s a fair thing for the industry to have. We should give Nest time to build then I would remove the restrictions but I would make sure Nest is self-financing by the time they are removed.’