National Employment Savings Trust, London, is expected lift the limits on annual contributions and transfers in and out of NEST by April 2017.
Removal of the limits has been recommended by the U.K.'s Department for Work and Pensions following an independent review. The current annual contribution limit is £4,500 ($6,700) a year.
NEST was created by the U.K. government as a nationwide defined contribution plan designed for lower-income workers.
In a statement, Helen Dean, managing director of product and operations at NEST wrote, “We are pleased the government has decided that from 2017 members and employers will be able to use NEST as they would any other pension, with no specific restrictions on the amount they can contribute or the ability to transfer in and out.”
“It's hard to justify keeping this limit for another four years based on what is in individuals' or employers' interests. There are two obvious reasons why the government may have decided not to scrap it straight away,” wrote David Robbins, a Reigart, England-based senior consultant at Towers Watson & Co., in a statement.
“The first is that the European Commission cited the restrictions when approving the taxpayer-subsidised loan that NEST receives: The government knew that any decision it took could be challenged by NEST's competitors and may have preferred announcing a compromise it thought everyone could accept to kicking off a period of uncertainty. The second is the capacity crunch amongst pension providers. The government appears to think that this could be more damaging if NEST's attention became more focused on employers who other providers will in any case not turn away,” Mr. Robbins wrote.
Phone calls to Mr. Robbins and Ms. Dean, as well as NEST spokeswoman Heather Tilston, were not returned by press time.
