The National Employment Savings Trust (Nest) is close to finalising an opt-out process it believes will overcome its limited success in winning big employer clients.
Anecdotally, leading consultants have put the amount of business Nest has won at only 5% of employers, auto-enrolling this year and next.
But a process making it simpler for employees to opt out could change its fortunes.
There is a lot more to come and we are showing that to corporates
Tim Jones, chief executive at Nest, has admitted his proposition is being ruled out by employers due to caps on contributions, the inability to transfer-in and a limited interaction with employers on data compliance.
Some of these restrictions are the focus of a government consultation, particularly for transfers-in, but other leading employers have also baulked at the overall 0.5% charges.
Jones said: “A number of employers are ruling Nest out of the equation early on in conversations because of the restrictions. For instance, it is the only scheme you cannot put in a bequest into.
“Employers are saying, ‘Why on earth would I risk these restrictions?’ And we have reported that back to government.”
However, Jones remains optimistic as several large household-name employers, believed to be financial services firms and supermarket chains, have agreed to sign up to Nest and will be announced shortly.
He said: “Our opt-out process is a significant help to employers. We are creating the collateral you get from [early] auto-enrolment. There is a lot more to come and we are showing that to corporates.”
Nest is known to be working on a telephone opt-out system that complies with regulations – lawyers have expressed doubts this is possible.
Competitors to Nest such as The People’s Pension and Now Pensions are emphasising the transparency of their charges, success in investments and the good value of their fees. However, few until now have emphasised the ease of opt-outs.
Steve Webb, pensions minister, thinks the reverse psychology of making opt-out easy is key to the success of auto-enrolment.
He believes that if people feel they have been coerced into saving they will not engage. He prefers employees to be given an easy opportunity to opt out, so that they will feel as if they have made an active decision either way.
