Restrictions that limit transfers into and out of the National Employment Savings Trust (NEST) should remain in place until the DC fund – launched as part of the UK government's introduction of auto-enrolment – becomes self-sustainable, the Work and Pensions select committee has been told.
Invited to discuss issues including pension charges and scheme governance, Steve Groves, chief executive of insurer Partnership, said the restrictions were introduced due to the industry's fear that NEST's state subsidy would affect the market's ability to compete. He argued that the scheme was created because the pensions industry had not been very good at serving pension savers with "small and even average pots".
Discussing NEST's inability to allow pension pot transfers out of or into the scheme, Groves said: "The restriction was put in there because of the fear of competing with a state-subsidised piece, and, over the medium term, that's a fair fear for an industry to have".
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