Calls grow for Nest to open to private firms

The Royal Society for the Encouragement of the Arts, Manufactures and Commerce (RSA) recently suggested Nest would be more profitable if members’ cash went to a number of private providers, rather than a central body.

It cited the restriction on saving more than £3,600 a year into Nest – designed to prevent the product competing unfairly with
private providers – as a major obstacle to its effectiveness.

And in a report entitled Pensions for the people: addressing the savings and investment crisis in Britain, the RSA called for Nest savers to have a choice of provider, which would offer no theoretical limit for contributions.

The document states: “There is the possible danger of the personal accounts system becoming an enormous monopolistic bureaucracy. Although they [private providers] could be required to pay a charge [to Nest Corporation] for using the personal accounts infrastructure, this could be substantially lower than the cost of establishing and maintaining a freestanding system.

“Therefore, there is nothing preventing [Nest Corporation] contracting out fund management functions to third parties.”