Supporting automatic enrolment - the Government response to the call for evidence on the impact of the annual contribution limit and the transfer restrictions on NEST (Paperback)

NEST was established to underpin automatic enrolment by providing a workplace pension scheme for any employer who wished to use it to meet their automatic enrolment duties. It was set up to focus on a target market of smaller employers and low to moderate earners, who the existing pensions industry had found it more difficult to serve. To ensure that NEST remained focused on this target market, two constraints were placed on the scheme - a cap on annual contributions and restrictions on transfers in to and out of the scheme. These constraints were always a temporary measure and there is already a statutory requirement to review their effect in 2017, once roll out of automatic enrolment is complete. The Department for Work and Pensions invited views and evidence pertinent to whether the annual contribution limit and the transfer restrictions worked in the way that they were intended, or whether there was a case for change. The Government's view is that at this stage in implementation, the contribution limit will not restrict the way in which people save or cause employers to choose higher charging or poor quality schemes. Nor should the contribution limit have any impact on the vast majority of SMEs. The Department, in co-operation with NEST, the pensions industry and employer groups needs to communicate clearly and effectively that the constraints are not a real barrier to SMEs using NEST to meet the automatic enrolment duties and that they will be removed in 2017