Govt pension fund lifts transfer ban for four million people

A set of traffic lights slows traffic opposite the Lloyd's Building, the home of the insurance institution Lloyd's of London on September 25 2008 in London, England
Over four million members of Nest will be able to transfer in other pension savings held elsewhere from 1 April Credit: Matt Cardy/Getty Images

Nest, the £1.5bn government-backed pension provider, is to lift the ban on transfers into the scheme for its four million plus members at a reduced fee.

The National Employment Savings Trust provides pensions for nearly 300,000 employers and four-and-a-half million people.

It was set up when the government launched its flagship savings programme, "automatic enrolment", in 2012. 

Under the rules all employers have pay into pensions on behalf of their eligible staff and Nest was established as a provider of last resort.

EU rules on state aid put a block on members moving other pensions saved elsewhere into the scheme. That block is now expiring.

But from 1 April members will be able to move any existing pensions above £50 into Nest.

Retirement: will your money run out before you die? Retirement: will your money run out before you die?
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In addition, the normal 1.8pc charge on each contribution looks set to be waived for transferred funds, the pensions minister Richard Harrington suggested last week.

Nest's usual 0.3pc annual charge will apply.

A spokesman for Nest said: "From 1 April, existing members can log in to their account and download a pre-populated form from our website to send to their other pension provider to complete.

"A dashboard on Nest’s website tracks the progress of the transfer once the member has sent the form back to us. Once we get all the information and money back from the other scheme then we will process the transfer in three working days."

Financial advisers often recommend consolidating pension pots collected over your career.

It is easier to keep track of savings when they are in the same place and fees on older-style pension policies are often far higher, so moving into a modern scheme like Nest could made a big difference to the final value of your pension.

But anyone thinking of transferring must careful read the terms of their existing pensions.

Many contracts written in the Eighties and Nineties have guaranteed annuity rates embedded which are often far more generous than what is available on the open market today.

The Department for Work and Pensions also announced it would not be pursuing plans for Nest to develop its own range of retirement solutions.

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