The government has missed an opportunity to create a more flexible savings vehicle in NEST, according to director-general of Saga Ros Altmann.
Pensions minister Steve Webb today announced auto-enrolment into workplace pension schemes will apply for employees earning £7,475 per year and over.
All businesses, regardless of size will have to provide employees with a pension scheme, the default choice for which is NEST.
Altmann, however, says she would prefer to see more flexibility within NEST.
"Why does this have to be a pension? Why not an ISA? Why not just get people saving?" she says.
"NEST as a savings vehicle could be used by people in their 20s who are afraid to lock their money away for 30 years, or students could use NEST to save in order to pay back student loans.
"People are far less likely to opt out if they can access their money if they need it, and a more flexible NEST would solve the problem of administrating small pension pots too."
Altmann adds the initial charge of 2% for members joining NEST is "a disgrace".
This charge is to reimburse the government for the cost of setting-up the scheme, but Altmann feels it could penalise people who are only in NEST for a short time as the low, long-term cost would not offset this cost.
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created