Press release

Call for evidence on NEST constraints published

A call for evidence on the impact of two statutory constraints on the National Employment Savings Trust (NEST).

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

A call for evidence on the impact of two statutory constraints on the National Employment Savings Trust (NEST), one of the pension schemes employers can choose for automatic enrolment, is published today.

The Government is seeking views and evidence on whether the annual contribution limit and transfer restrictions on NEST are influencing employers’ choice of automatic enrolment scheme in a way that was not intended.

NEST has a public service obligation to ensure that everyone eligible for automatic enrolment can access a low-cost pension scheme. It has been designed to target low to moderate earners, smaller employers and firms with a high turnover of staff who were not served by the existing market.

Steve Webb, Minister for Pensions said:

We are already seeing the positive effect that NEST is having on the world of pensions.  Workers are being signed up for workplace pension schemes at much lower charges than in the past and firms have much more choice of provider than in the past.

But we need to make sure that this continues as automatic enrolment moves on to smaller firms and that the constraints on NEST are not a barrier to good consumer outcomes

The Work and Pensions Select Committee recently concluded that the annual contribution limit and the transfer restrictions on NEST may prevent the not-for-profit scheme from servicing market failure. The Committee recommended that the Government should remove them.

But the evidence available is not conclusive and the Government doesn’t want to propose any changes without understanding their impact. The Government is seeking evidence and views of employers, industry, consumers and their representatives and will consider them fully before deciding on any action.

Notes to editors:

‘Supporting automatic enrolment: A call for evidence on the impact of the annual contribution limit and the restrictions on transfers on the National Employment Savings Trust’ is available at:

The call for evidence runs from 6 November 2012 until 28 January 2013.  The Department will publish a summary of responses in spring 2013.

Automatic enrolment into workplace pensions started on Monday 1 October with the largest firms going first.   All employers will be brought into the reforms by February 2018.

The annual contribution limit and transfer restrictions are just two of the constraints placed on NEST to focus it on the supply gap in the market for low to moderate earners and smaller employers. The others are:

  • Public Service Obligation - must accept everyone automatically enrolled into it, even if the income from the individual does not cover the cost of their account
  • Low-cost objective - must offer good value, with no differential pricing, at a charge level comparable to those available to high earners or those working for large employers
  • No other products - cannot offer other products, for example life insurance, as a way of boosting margins - ensuring it is simple

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Published 6 November 2012