The government has announced that the restrictions on the National Employment Savings Trust (Nest) will be lifted in April 2017.
The restrictions include a cap on annual contributions, as well as a ban on transfers in and out of the scheme.
The announcement follows a government call for evidence on the restrictions. The Department for Work and Pensions sought views and evidence on whether the annual contribution limit and transfer restrictions on Nest were having unintended consequences.
In its response, published on 10 July, the government found a perception that the constraints were stopping Nest serving its target market.
Steve Webb (pictured), minister for pensions, said: “Targeting low-to-moderate earners that the market has traditionally forgotten, Nest has innovated with its use of language and investment strategy, and has ensured that everyone has access to quality pension provision.
“That is why I am not making any changes until 2017, when automatic-enrolment is fully rolled-out. At this point, I will lift the contribution limit so that Nest remains a force for good in the marketplace, driving up standards and best practice.
“The position on bulk transfers is much the same. As huge numbers of employers gear up to start to enrol their workers, we need Nest to focus on getting these people into pension saving. Once this is achieved and the market is established, the restrictions on bulk transfers will be lifted.”
Helen Dean, managing director of product and operations at Nest, added: “We are pleased the government has decided that, from 2017, members and employers will be able to use Nest as they would any other pension, with no specific restrictions on the amount they can contribute or the ability to transfer in and out.
“We welcome the certainty this announcement brings for employers and members. This means the restrictions will be lifted before minimum contributions rise to 5% in 2017.”
But Gregg McClymont, Labour’s shadow pensions minister, said: “Last year, the government blamed Brussels for not being able to lift the restrictions on Nest. We published legal advice to say this was not true.
“This year, it says that it can lift the restrictions after all. But not until 2017 and after the majority of people have already been auto-enrolled. The government has failed savers and pandered to special interests instead.”