Labour says the Government has “failed savers and pandered to special interests” in deciding not to remove Nest’s restrictions until 2017.
Pensions minister Steve Webb has today published a written ministerial statement confirming the Government’s intention to remove Nest’s £4,500 annual contribution cap and ban on transfers in and out in four years time.
The move has been welcomed by insurance companies and Nest itself.
However, Labour shadow pensions minister Gregg McClymont wants the Government to remove Nest’s constraints before 2017.
He says: “Last year the Government blamed Brussels for not being able to lift the restrictions on Nest.
“We published legal advice to say this was not true. This year, they say that they can lift the restrictions after all. But not until 2017 and after the majority of people have already been auto-enrolled.
“The Government has failed savers and pandered to special interests instead.
“We need urgent action now to create private pensions people can trust.”
Labour has previously called for the restrictions to be removed “as soon as possible”, while the work and pensions select committee produced a report in March urging the Government to ditch the constraints “as a matter of urgency”.
However, in an interview with Fundweb sister title Money Marketing in November Webb said the restrictions would not be removed quickly because the Government needs to get state aid clearance from the EU.
This is because Nest was established with a loan from the UK Government.
Webb said: “If we came up with a specific proposal we would need to consult on it domestically and, because we would be changing the subsidy arrangements, we would also need state aid clearance from the EU.
“It is difficult to speculate how long it will take but it will not be very quick. We think the EU is sympathetic to what Nest is trying to do and wants Nest to succeed.”