DWP publishes response to Nest policy amendment consultation


The Department for Work and Pensions (DWP) has published its response to a consultation exploring proposed amendments to the National Employment Saving Trust (Nest) policy framework.

Published in March 2017, the call for evidence highlighted the government’s intention to amend the Nest Order so that participating employers can contractually enrol their employees into the Nest pension scheme, and enable them to consolidate pension provision for their employees at the outset using one scheme. The consultation therefore sought to collect feedback on whether this change would still enable the Nest pension scheme to operate effectively.

The National Employment Savings Trust (Amendment) Order 2018, would additionally require the Nest corporation to undertake research regarding to the operation, development and amendment of the Nest pension scheme to ensure operations are aligned with changes in data protection law, for example the implementation of the General Data Protection Regulation (GDPR) in May 2018. The draft Order also recommends that the Nest corporation has the ability to close members’ pension accounts that have zero funds, subject to certain conditions being met. This is to help reduce inefficiencies.

Providing clarification that individuals may join the scheme in the event of a bulk transfer with consent, the draft order will require that any amount must be applied to a Nest pension member’s account as a result of a bulk transfer. Primary transfer restrictions were removed from the Nest pension scheme on 1 April 2017 to provide scope for members to consolidate their pension savings.

The government’s response confirms that the proposed amendments still achieve the policy aim of facilitating the effective operation of the Nest pension scheme. The revised measures have been designed to help employers when selecting a suitable automatic enrolment pension scheme and additionally provide clarification. Furthermore, the government cite that the changes will have a limited and proportionate effect on how Nest can operate in the market.

In response to feedback made during the call for evidence, the government state that requiring Nest to inform employers before empty pension accounts are closed would be unduly restrictive, however Nest corporation has agreed to review this point when designing the processes nearer the time implementation.

The government further commented that the Nest pension scheme should continue to focus on low to moderate earners and smaller employers during the roll-out of auto-enrolment. It also confirms that contractual enrolment receives broad support throughout the call for evidence process, and offers employers a different mechanism for joining the scheme.

The response, published in January 2018, concluded: “The government considers that all the changes in the Order support the delivery of the policy intent of providing a suitable low cost pension scheme to all employers meeting their automatic enrolment duties.”