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Simply meeting people’s financial needs

Contact our press team

Eloise Henderson
Head of Strategic Communications
T: 01293 205335
M: 07741 384460

Blaise Tapp
Media Relations Manager
T: 01293 205336
M: 07388 943700

Responding to the government’s consultation on draft regulations for removing NEST’s annual contribution limit and transfer restrictions, The People’s Pension has called for stability in the pensions market.

NEST was created by the government to support auto-enrolment by serving employers who could not be served by the traditional pensions industry. It was awarded a public subsidy to help finance its public service obligation, to serve any employer, and given an annual contribution limit and transfer restrictions to minimise any distorting impact on the pensions industry.

The government has now decided to lift the annual contribution limit and transfer restrictions, but we are concerned that NEST still has the capacity to cause market distortion. We think that the government needs to answer some important questions before it proceeds. Foremost amongst these is the way that NEST’s charging structure, which includes an upfront contribution charge, will work with transfers.

Our response to the consultation makes the following key points:

  • NEST is an important part of automatic enrolment, but removing all of its constraints leads it away from serving its target audience and could cause market distortions.
  • Consideration should be given to how this impacts on NEST’s finances, and therefore the case for its government subsidy (state aid). We believe that state aid to NEST should be eliminated or reduced if the government proceeds with removing its constraints.
  • There is uncertainty around how NEST’s charging structure, and its contribution charge in particular, will apply to transfers. The government must provide clarity before it proceeds as this has the potential to cause market distortion.
  • NEST has been given special status by the government and regulators. That must now end, and NEST must have the same regulatory and accounting requirements as other master trusts.
  • The government has a conflict of interest in its relationship with NEST and as a result appears to treat NEST very differently from other providers. Oversight of it should be handed to an independent body with no financial interest in NEST.

Read our response to the consultation: Removal of NEST constraints