Covering a wide range of topics the 'Automatic enrolment in workplace pensions and the National Employment Savings Trust' report that was issued by the Work and Pensions Select Committee has stirred up the pensions industry with some people opposing the recommendations and others rooting for direct implementation. Pension Funds Insider gives you a brief overview of some key opinions.

Adrian Boulding, pensions strategy director at Legal & General:

"There is a strong social need for a national saving scheme amongst the low paid and the hitherto un-pensioned, the majority of whom may be working for small employers. These restrictions keep NEST tightly focused on the areas where thenation needs it. Removing the restrictions before the scheduled review in 2017 would risk NEST becoming distracted to the detriment of the very consumers it was created for. "

"There is a real danger that the smallest employers will not be able to find a private pension scheme, and that is why over £100 million of taxpayers money has been spent creating NEST. It would endanger the whole auto-enrolment programme if NEST were allowed to go off in other directions now and neglect the very people it was created for."

Jamie Fiveash, director of customer solutions at B&CE (The People's Pension):

"Our strategy to launch The People's Pension has been driven by two factors; demand from our customers and competition in the market place from NEST.

"NEST was conceived with specific objectives; namely to serve small employers and low to moderate earners who may not be able to gain access to a good quality, low cost scheme. NEST was also designed to complement good existing schemes and it was thought by many, including B&CE, that NEST would be operated on a passive, 'open door' approach to those who wanted to use them. In reality NEST has been aggressive in hunting larger employers, presumably incurring large costs in doing so, including those where good pension provision already exists.

"The restrictions being proposed to be removed were put in place for NEST to concentrate on its original remit. Despite these, NEST appears to have pursued a business plan in contradiction to their original objectives. NEST was given a large amount of funding that could be considered as state aid to meet this objective – this aid is not available to other providers and the details of its terms are not in the public domain. Both the DWP and The Pensions Regulator also make specific mention of NEST in their communications. We therefore already have a playing field tipped in favour of NEST."

Gregg McClymont MP, Labour's Shadow Work and Pensions Minister:

"The restrictions have played their role in ensuring that NEST developed well-designed and low charge pension products focused on lower earners. The Select Committee makes a compelling case that lifting the restrictions on NEST would now be to the benefit of consumers and employers. The government needs to move from consideration to action."

Martin Palmer, head of corporate benefits marketing at Friends Life:

"By 2017 existing providers will have aligned their systems, processes and business models with auto-enrolment requirements, enabling a level playing field for competition. Removal of the cap would allow contributions at a rate higher than those for whom the product was initially designed.

"However, we would expect many employers with a larger proportion of higher paid employees to have an existing scheme in place, which would offer the customer experience and return on investment in terms of employee attraction and retention that employers want from their core pension offering.

"We fully support the removal of restrictions around transfers to facilitate the amalgamation of small pension pots, both for NEST and also into other employer sponsored pension schemes. For larger transfers we believe that a review should take place in 2017, allowing time for fund performance to be judged and understood in relation to charges.

Paul Macro, head of defined contribution at Mercer:

"The restrictions were initially put in place to avoid impacting employers' existing schemes. Removing these restrictions might result in employers shutting down perfectly good schemes to move to NEST. Whilst Mercer expected the restrictions to be reviewed around 2017, it's concerning that this may now be brought forward to before the first official staging date of October 2012. Lifting the restrictions to allow higher contributing members to use NEST should prompt NEST to reconsider its investment range as these members are unlikely to be satisfied by the investment options on offer.

"Lifting the ban on transfers would ease the consolidation of small funds and makes sense. However, as things currently stand employees can only access NEST through their employer, so a much wider change would be needed for individuals to be able to set up a NEST account for consolidation purposes if their employer was not using NEST."

Neil Carberry, director for employment policy at CBI:

"The Committee is right to support a simpler state pension and to encourage government to look again at the interaction between long-term savings for pensions and saving for housing. However, with the introduction of auto-enrolment just a few months away, we would caution against making further changes to what is a carefully balanced regulatory framework.

"The review of NEST scheduled for 2017 is the right time to address issues such as which controls have placed on saving into NEST.

"It's disappointing that the Committee has not focussed on the real reason why NEST may be struggling to compete with low-cost private sector competitors, which is its high and complex charging regime."

First published 15.03.2012

azeevalkink@wilmington.co.uk