Pension Saving Limits to be Scrapped
24 October 2014
Pensions are in the news once again and it’s good news. Restrictions that limit the amount that millions of workers can save towards their pensions are set to be scrapped.
This move is the result of a year of negotiations between ministers and the European Commission. More than 8,900 employers who administer their pension scheme through the National Employment Savings Trust (NEST) will benefit from the lifting of the current annual contribution limit of £4,600. In addition, pension savers within NEST can also expect to gain new transfer rights, which will give them the same opportunities to consolidate their pension savings as members of other schemes.
NEST was established by the Government to support automatic enrolment by providing a low-cost pension scheme, primarily for smaller employers. There are currently more than 1.5 million workers who save into workplace pensions through NEST, and according to Government forecasts, that figure is set to rise to up to four million over the next three years. The restrictions were originally imposed to ensure NEST focused on its target market. There have since, however, been changes in the market since the conception of the scheme and lifting this restriction from 2017 will be advantageous to NEST savers.
The fact that the Government is willing to remove this restriction should give employers confidence that NEST is a suitable scheme for their employees.
If you would like further information, please email Peter Haveron or call us on 0141 221 2984.