Employers, unions and consumer groups call for an end to NEST restrictions
- Published on Monday, 28 January 2013 10:38
- Posted by Vicki Mitchem
A coalition of consumer groups, employer organisations and the TUC has written to the pensions minister calling on the government to lift the current legal restrictions on NEST, which impose a maximum annual contribution and forbids transfers in and out of the pension scheme.
The letter on NEST - the new low cost workplace pension scheme designed for low to medium earners - is signed by the TUC, Age UK, EEF The Manufacturers' Organisation, the Federation of Small Businesses, the British Chambers of Commerce and Which?. It calls on the government to end the restrictions as they make auto-enrolment difficult for both employers and employees.
The letter says that many employers are unable to use NEST as a single scheme for their whole workforce as a result of the restrictions, and having to potentially juggle more than one scheme is an unnecessary administrative headache which will also add to costs.
The restrictions also prevent employees from building up the pension they desire, particularly in the years running up to retirement when many wish to maximise their savings.
The letter calls on the government to end these restrictions as soon as possible, and rejects the suggestion that they should only go after employers have chosen their auto-enrolment scheme, as some organisations suggest.
The signatories believe that ending restrictions in 2018 - a proposal currently being considered by ministers - will be too late for employers as by then they will have already decided their workplace pension providers.
The government's consultation on the lifting of NEST restrictions closes today.
TUC General Secretary Frances O'Grady said: 'We were always opposed to the restrictions on NEST because they are against the best interests of its members and the UK workforce in general. Now even those who said they were needed to ensure that NEST focussed on low to medium earners must concede that they have done that job.
'The restrictions are a burden on employers and workers, and must be lifted as soon as possible.'
National Policy Chairman of the Federation of Small Businesses Mike Cherry 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.
'It is crucial that small businesses have the confidence that, should they choose NEST, their employees are not placed at an unfair disadvantage.'
EEF Director of Policy Steve Radley said: 'At a time when confidence in pension saving is low, the government must take every opportunity to make it as easy and transparent as possible. NEST has the potential to deliver this and could become the main way to invest in pensions for many employers and workers.
'But we will only get there if the government lifts the current restrictions on contributions which stand in the way of it becoming the low cost, low administration savings vehicle it needs to be.'