Legal challenges from pensions providers could scupper any attempts to remove restrictions on the National Employment Savings Trust (Nest), pensions minister Steve Webb has warned.
In a House of Commons European Committee debate on the European Commission's pensions white paper, Webb (pictured) suggested he would be willing to remove restrictions on Nest but warned that moving too quickly could provoke a legal challenge from providers, delaying reform.
Webb said he could get ‘a good headline’ by removing the ban on transfers between Nest and other pension schemes and the cap on contributions, but said it was not clear European law would allow it.
‘If we plough in there and got a legal challenge from a provider we would be stuck in the courts for 18 months. That would not be helpful. The political will is there that Nest does its job and we are considering the best way to do that,' he said.
Webb said the restrictions were put in place so that Nest did not fall foul of EU state aid rules. Nest has been funded by a multi-billion pound government loan which, said Webb, would be viewed by the European Union as an unfair government subsidy unless Nest was restricted to a target market of savers with low incomes and small businesses.
Labour shadow pensions minister Gregg McClymont argued there was no legal barrier to removing the restrictions and that the government needed to make the case to the European Commission that the loan would not count as state aid.
Webb countered: ‘His position is that there is no legal problem with removing the restrictions. Well, I would like to set my lawyers on his lawyers because that’s not the legal advice I get.’