date: 1 July 2013
embargo: For immediate release
New DWP research published today (Monday) makes a compelling case for lifting the restrictions on NEST (the National Employment Savings Trust), the low-cost national pensions scheme set up by government, says the TUC.
Legislation prevents NEST accepting most transfers in and out of the pension scheme and imposes an upper contributions limit how much anyone can put into NEST in any year.
The restrictions were introduced ostensibly to ensure that NEST catered for a target market of low to median earners, but also at the urging of sections of the insurance industry concerned at the prospects of a low cost new entrant into the market.
The main effect of the restrictions is to make any employer with staff paid above the salary ranges of the target audience have an additional pension scheme on top of NEST for better paid staff.
The government acknowledges that people earning £60,000 will be hit by the restriction on contributions into NEST. However, the TUC believes that the strong desire for a single provider among small employers means that low to median earners are also less likely to be enrolled into NEST because firms will look elsewhere.
The new DWP research shows:
TUC General Secretary Frances O'Grady said: 'NEST now has a great track record in providing innovative pensions for low to middle earners. Lifting the restrictions will not alter this.
'NEST is the only pension scheme that cannot say no. It has a public duty to accept every employer, even those that pension companies would not want as customers or only do so at charges well above NEST levels.
'Smaller employers without in-house pensions expertise are those most likely to want a single pension schemes and also employ very many workers on low to moderate wages. The restrictions are likely to prevent NEST reaching many in the target market parliament intended. The case for lifting them is now unanswerable.'
NOTES TO EDITORS:
- The DWP research is available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/209865/ad-hoc-supporting-ae-smes.pdf and https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/209864/ad-hoc-supporting-ae-further-analysis.pdf
- The TUC's campaign plan can be downloaded from www.tuc.org.uk/campaignplan
- All TUC press releases can be found at www.tuc.org.uk
- Follow the TUC on Twitter: @tucnews
Contacts:
Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Want to hear about our latest news and blogs?
Sign up now to get it straight to your inbox
To access the admin area, you will need to setup two-factor authentication (TFA).