An influential group of MPs has called for 'key restrictions' to be lifted from the auto-enrolment workplace pension scheme.
The National Employment Savings Trust – known as NEST – is to be rolled out to the bigger firms in the UK from October this year, with the aim that an additional four to eight million workers will be saving into a pension by the time it is fully implemented in five years time.
Employees will be given the choice of enrolling their staff into a company pension or have them join the NEST scheme, both of which they would have to make contributions towards.
But a report by the Work and Pensions Select Committee says that two key restrictions should be lifted from the scheme to make it more attractive.
Firstly, it is recommending that the annual cap on contributions be removed from NEST, as to keep it will 'result in severe complexities for businesses'.
The committee of MPs said that keeping the cap would mean that employers with higher-paid employees will not be able to use NEST as their single pension scheme, meaning contributions above the cap would have to be saved into an additional pension.
Additionally, MPs are calling for a reversal of the ban on transferring existing pension pots into NEST.
To keep the rules as they are will be disruptive both for individuals who would like to consolidate separate pension pots into NEST and employees who would like to operate a single occupational pension scheme.
"Auto-enrolment is a welcome reform that will encourage high participation in workplace pension schemes," said Dame Anne Begg MP, Chair of the Work and Pensions Committee.
"We welcome the Government's overall approach and have made several recommendations designed to help make sure the programme is a success.
"By lifting these two key restrictions placed on NEST, the Government would remove barriers that might currently prevent employers from choosing NEST as their pension scheme, as well as making it easier for employees to bring together the other small pension pots they are likely to have.
"This will help reduce the multiple administrative charges that many people pay and help them to understand the total retirement savings they will have built up."
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