Government urged to lift restrictions on workplace pension schemes

A number of groups representing employers, workers and consumers are calling on the Government to relax restrictions on the National Employment Savings Trust (Nest) pension scheme so that small firms and savers can benefit fully from it.

Age UK, Which?, the Federation of Small Businesses (FSB) and the TUC are among those asking for certain rules surrounding the low-cost initiative to be lifted.

In a letter to Pensions Minister Steve Webb, they claim that barriers regarding Nest will create problems for both employers and workers as the Government's pension saving reforms are rolled out

For instance, imposing maximum annual contributions and banning transfers in and out of the pension scheme could leave many at a disadvantage, it is believed.

Automatic enrolment began last autumn with larger firms first to take part, but concerns have been raised about how smaller companies will cope under the changes.

Up to 10 million people will eventually be enrolled into workplace pensions, with Nest introduced as a low-cost, not-for-profit option as a means of filling gaps in the existing market.

The letter 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."

Many employers will not be able to use Nest as a single pension for their entire workforce, it is feared, something which the signatories state could force them to juggle more than once scheme, thus adding to their costs.

Furthermore, the groups claim the restrictions will prevent workers from maximising their savings in the long term.

A proposal that aims to end restrictions in 2018 is currently being considered, but employers, workers and consumers believe this will come too late, the letter suggests, claiming the damage will already be done by then.

Back in November the Government launched a consultation to discover whether restrictions placed on Nest are obstructing good outcomes for consumers.

Copyright Press Association 2013