Restrictions placed on the National Employment Savings Trust (NEST) are there to protect savers from poor retirement outcomes and should not be scrapped, according to Aegon.
The provider said lifting the ban on transfers in and out of the scheme, and scrapping the maximum contribution limits would be a mistake and could result in the wrong kind of pension savers using NEST.
Yesterday, the work and pensions select committee said the restrictions should be lifted as a matter of urgency. The MPs were backed by the majority of the industry.
Aegon UK chief executive, Adrian Grace said NEST was set up to complement the existing private sector pension industry and was intended to plug a very specific gap.
He said pension ‘experts' recommending the restrictions be removed "should know better".
Grace explained: "If Aegon, or any other pension provider for that matter, brought a low cost pension product to market that was specifically targeted at one group, with clear research backing up why it was potentially a good proposition for that group, and then allowed other people with different needs in through the back door, in the full knowledge the scheme might not be appropriate for them, we'd rightly have the Financial Services Authority to answer to for selling inappropriate products.
"That is what treating employees and customers fairly is all about. NEST was put in place to meet the needs of a defined target market and has been designed for that market."
He added: "The restrictions are in place for a very good reason: to protect people from ending up in a scheme that does not meet their retirement objectives.
"Other than vested interest for commercial reasons, I cannot see how pensions ‘experts' who should know better, can, with a clear conscience, argue for the restrictions to be removed. I wonder if those arguing for the restrictions to be lifted are prepared to be accountable for the poor retirement outcomes that could result."
Grace also highlighted the ongoing debate around consultancy charging, which is making it harder for employers to get the correct advice.
"If we were confident all employers would receive professional advice in choosing a scheme that was appropriate for their workforce, we'd be less concerned about NEST's restrictions being lifted.
"But if anything, the debate around consultancy charging is making it increasingly likely that many employers won't have access to that advice. This increases the risk that employers will default into NEST even if their workforce is far from the target audience NEST was designed for."
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