Aviva has challenged the National Employment Savings Trust (Nest) over its assessment of the extent to which means-tested benefits will interact with auto-enrolment under existing rules.
Nest assistant director of market and member engagement Paul Gilbody told the Corporate Adviser Summit delegates last month that a “minority” of people will be adversely affected by means-testing.
But Paul Goodwin, head of pensions marketing at Aviva, speaking before the DWP’s announcement of a flat-rate pension of £140 a week, said that the means-testing issue currently presents a massive problem and argued the numbers affected would be significant, risking a media and public backlash that could
Gilbody said: “I don’t have the figure to hand but the means-testing issue will affect a small number of people. It is not the majority of people – we are not talking 70 or 80 or 90 per cent of the people who are going to be enrolled in Nest”.
“The number of people who have a means-testing issue affect is a smaller number than those that won’t. You are talking about a minority of people.”
Goodwin said: “If the Nest target market is somewhere between 6m and 9m people, depending on the figures, we’ve currently got about 6m people qualifying for pensions credit, so I think there is a fairly good match between the two. And we’ve got 1.8m out of those 6m that don’t actually apply for it. So I just take issue with Paul’s point. I think means-testing is a major issue.”
A 2009 DWP report into personal accounts concluded that around 95 per cent of people in the scheme would end up getting out more than they put in.