Plans to remove restrictions on who can join the pension scheme established by the government as part of auto-enrolment, the National Employment Savings Trust, have been published for consultation today.
NEST was set up to provide employers coming under the auspices of auto-enrolment with a low-cost ready-made pension scheme they could enrol their employees into. It has been designed to target low to moderate earners, smaller employers and firms with a high turnover of staff who are not served by the existing market.
But, in March 2012, the House of Commons' Work and Pensions Select Committee warned that limits on transferring in and out of the scheme and a cap on the annual contributions a member of the scheme can make could prevent employers from using NEST. The annual contribution limit is currently set at £4,400.
Launching a call for evidence today, the Department for Work and Pensions said it wanted to find out whether this was indeed the case before launching any formal proposals on removing the restrictions. The evidence supporting their removal was 'not conclusive', it said.
Steve Webb, pensions minister, 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.'
Darren Philp, director of policy, at the National Association of Pension Funds, commented: 'The economic landscape has changed significantly since the auto-enrolment reforms were legislated so there is a case for reviewing the restrictions if the evidence shows they are acting as a barrier for employers wanting to use NEST or for employees getting value for money.
'Other requirements on NEST which limit its ability to compete with other providers in the market, such as its public service obligation to serve all employers, will remain in place.'
The call for evidence runs until January 28, and the DWP plans to publish a summary of responses next spring.