NEST – contributions cap and transfer ban to be abolishedPrint publication
National Employment Savings Trust (NEST) is a trust based occupational money purchase scheme, which was established under the Pensions Act 2008 to help assist with the Government’s auto-enrolment obligations.
Currently, NEST is subject to two key restrictions:
- Under the NEST Scheme, contributions made by or on behalf of jobholders cannot exceed £4,500 per year (2013/2014 tax year); and
- Subject to some exceptions, jobholders are unable to transfer their pension pots into or out of NEST.
The Government has stated that it will legislate to remove the annual contributions limit and restrictions on transfers by the latest of April 2017. This has come about as a result of the Government reviewing the impact that such scheme restrictions have on NEST members. It is also important to note that the ban in transfers will be removed at the same time of the introduction of automatic transfers of small pension pots.
Due to the way in which NEST was funded, it was necessary for the European Commission (EC) to agree to the establishment of NEST under EU state aid rules. As such, and before the above restrictions could be amended, the Government had to seek approval from the EC. We are pleased to announce that the Department for Work and Pensions has confirmed that the Government has now been given approval by the EC to make these amendments to NEST.