Pensions - Articles - Aegon comment on NEST consultation

 NEST was established as the government was concerned about the ability of pension providers to offer pensions to low earners on an economic basis. NEST has a public service obligation to all employers and their employees and cannot turn them away if the employer selects NEST for its pension provision. It is governed by rules to ensure it is focused on its target auto-enrolment market of low to moderate earners. In return it is funded by government loans.

 Kate Smith, head of pensions at Aegon said: “All pension savers should have the opportunity to access the new pension freedoms and it’s right that NEST should be able to offer the full retirement income options to its own members. But opening up its retirement income proposition to non-NEST members would change its initial scope considerably and potentially create an uneven regulatory playing field with the private sector. For example, flexi access income drawdown products are regulated by the FCA, providing valuable protection for consumers. The FCA should be involved in any discussions to expand NEST’s retirement income solutions to non-NEST members. We’d expect that any extension of NEST’s scope beyond its focus on lower earners would have to be fair and take account of the costs faced by commercial organisations.

 “It should be remembered that, unlike the pension industry, NEST is propped up by government loans allowing it to offer low-cost options. Extending NEST into the wider retirement income market, effectively subsidised by the taxpayer, will give NEST a competitive advantage.”