National Employment Savings Trust restrictions to be lifted

The annual contribution limit and transfer restrictions on the National Employment Savings Trust will be lifted, the Pensions Minister announced this morning. Steve Webb MP said the move was to "ensure all businesses can be confident that this low cost and easy to use scheme is among the options they can choose to enrol their workforce". The restriction stands at a maximum annual contribution of £4,600.NEST, set up to support automatic enrolment, has over 1.5 million scheme members, and has a public service obligation to accept any workerautomatically enrolled by their employer.NEST receives State aid and the restrictions were put in place to balance any competitive advantage.Mr Webb wants these to be removed, with this taking effect on 1 April 2017. A technical consultation was launched this morning.Tim Jones, NEST chief executive, said: "This is welcome and timely confirmation that the restrictions on contributions and transfers will be removed by 2017, particularly with automatic enrolment now starting to affect medium and smaller employers. {desktop}{/desktop}{mobile}{/mobile} "Removing the cap on contributions by April 2017 means that the cap will be gone before minimum contributions increase from their current level (2 per cent) to 5 per cent."That not only simplifies things for employers, but also helps NEST members in building up their pots in the longer term."NEST remains critical to delivering the automatic enrolment policy, fulfilling its role as the provider with a public service obligation to be open to any employer to use."Tom McPhail, head of pensions research at Hargreaves Lansdown, said: "The original plan for NEST was that these restrictions would be reviewed in 2017, so in making this announcement now, the government could be accused of jumping the gun, however there are good reasons behind this decision."Firstly, auto-enrolment is working better than expected. Opt-out rates have been lower than many had forecast and so far the pensions industry has proved itself capable of working with NEST to meet market demand."The argument in favour of artificially restricting NEST's ability to compete directly with its pensions industry peers is no longer relevant."He said: "Elements of the pensions industry have lobbied hard to bind and restrict NEST as much as possible."Hargreaves Lansdown has consistently argued in favour of removing the restrictions on NEST at the first possible opportunity."

National Employment Savings Trust restrictions to be lifted

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