Coalition Pensions minister Steve Webb has stated that if the NEST scheme goes ahead as planned, it should increase the amount of people who take advantage of the open market option (OMO). He added that NEST would create thousands more annuitants as many more people would reach retirement with a pension fund that could be converted into an annuity. He noted that because NEST is not designed to pay out benefits it would become even more important when it came to converting the fund at retirement.
Commenting on the difference between NEST and other forms of pension savings Webb said that…“…the emphasis has been on accumulation until now. Nest will not give you a pension. Every Nest pensioner will have to shop around and this will have a transformational effect.”
Pension guru Tom McPhail from annuity specialists Hargreaves Lansdown stated that prices for annuities could come under pressure. He said the smaller pension funds from NEST savers would impact on insurers. He noted that…. “…pricing actuaries of annuity providers are going to have to watch with interest.”
