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Government urged to lift NEST restrictions ‘now’


The Government should lift the restrictions governing the new National Employment Savings Trust (NEST) as ‘a matter of urgency’, an influential Committee of MPs has advised.


In a new report, the Work and Pensions Committee calls on the Government to remove the cap on annual contributions to NEST, along with the ban on transfers in and out of the scheme.


Contributions into NEST are currently limited to an annual contribution cap of £4,400. However, the Committee has warned that the cap is adding to the complexity for employers and employees.


The report also suggests that the ban on transfers prevents the consolidation of small pension pots, and should be fixed in order for the Government to proceed with its ‘pot follows member’ plan.


MPs claim that the case for abolishing these existing limitations has become ‘even more powerful’ following the launch of pension auto-enrolment in October 2012.


Dame Anne Begg MP, chair of the Work and Pensions Select Committee, said: ‘For auto-enrolment to continue to work successfully, Nest must be allowed to thrive.


‘Employers want simplicity. They want to be able to choose one pension scheme to cover all their employees. The cap on annual contributions to Nest means that employers can’t opt for Nest for their higher-earners or if they want to make more generous contributions.


‘So some employers are dismissing the Nest option and choosing a private pension provider who can offer a scheme for all their employees’.