Another week, another few tweaks to the shape of the workplace pensions market.
The government’s planned lifting of the restrictions on the National Employment Savings Trust from 2017 was greeted with some derision from the other side of the Chamber.
Are we saying the more members in Nest, the better?
By delaying it until after the bulk of auto-enrolment has already been done, the government had “failed savers and pandered to special interests”, said shadow pensions minister Gregg McClymont in a press statement last week.
In defence, pensions minister Steve Webb’s ministerial statement argues that no employer contributing even at the full auto-enrolment level will exceed the contribution cap, and that requiring Nest to focus its work on smaller employers will pay dividends as these companies come to auto-enrol.
But there seems to be a bit of a disconnect here. The minister said that despite the “perception” that restrictions are affecting small and medium-sized employers, the reality is “quite the opposite”.
But it was Nest itself that was reporting the problems.
“At the moment they have a problem in considering Nest because [there may be] two or three people out of 250 employees that earn enough to take their contributions over the limit,” said CEO Tim Jones back in November.
Whoever’s right, there doesn’t seem to be much heat left in this argument and, as the capacity crunch looms, an SME-designed Nest will be just the ticket.
Elsewhere, in its study of the defined contribution market the Office of Fair Trading seems to be jumping on the scale bandwagon, questioning whether some small schemes can provide value for their members.
To those smaller DC schemes that struggle with governance, which could be anything under 1,000 members, the Pensions Regulator has gently suggested a multi-employer pension scheme could provide the necessary boost.
For the regulator to be encouraging a mastertrust or even a group personal pension scheme as a governance solution demonstrates how keen these watchdogs are on a more concentrated market.
Economies of scale for members, but also a more straightforward regulatory challenge. So are we saying the more members in Nest, the better?
Ian Smith is editor of Pensions Week. You can follow him on Twitter @iankmsmith and the team @pensionsweek
