The government has confirmed its intention to remove the annual contribution limit and transfer restrictions on the National Employment Savings Trust (Nest).
The restrictions on annual contributions, which currently stand at a maximum of £4,600, and removal of the restrictions on bulk transfers will be lifted from 1 April 2017.
The government has also retained the option to lift the restriction on individual transfers from 1 October 2015.
The restrictions were originally put in place to limit the competitive advantage of a not-for-profit provider that benefits from a state subsidy.
More than 1.5 million workplace savers have been automatically enrolled into Nest since the scheme was launched in 2012.
The confirmation follows an annoucement in July 2013 that Nest restrictions would be lifted in 2017.
The government will launch a short technical consultation on draft legislation this autumn, to remove the restrictions.
Steve Webb (pictured), pensions minister, said: “Nest was set up to support automatic-enrolment. It was designed to provide a quality, low-cost pension scheme focused on a target market of low-to-moderate earners and smaller employers.
“I am pleased to announce the government intends to remove the annual contribution limit and transfer restrictions on Nest, to ensure all businesses can be confident that this low-cost and easy-to-use scheme is among the options they can choose to enrol their workforce.”
Damian Stancombe, head of workplace health and wealth at Barnett Waddingham, added: “Nest has been allowed to exist as a non-competitive entity because clearly it would distort the provider market otherwise.
“The removal of the contribution limit and transfer restrictions is a step towards making Nest more competitive and should therefore only be allowed if the repayment of Nest’s debt to the government is properly classified.”
