Nest wrote earlier this month that it was looking into removing the restrictions on annual contributions and on transfers between pensions schemes. This would be to remove complexity and administrative burden for employers.
In a report published today, 'Lifting the restrictions on Nest', the Work and Pensions Committee said these changes should be made soon.
Dame Anne Begg MP, chair of the committee, said: "Since auto-enrolment began, the case for lifting the restrictions has become even more powerful, and the need for action more pressing. For auto-enrolment to continue to work successfully, Nest must be allowed to thrive.
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"Employers want simplicity. They want to be able to choose one pension scheme to cover all their employees. The cap on annual contributions to Nest means that employers can't opt for Nest for their higher-earners or if they want to make more generous contributions.
"So some employers are dismissing the Nest option and choosing a private pension provider who can offer a scheme for all their employees."
Regarding the removal of transfer restrictions, Dame Anne said: "The Government has already made clear it will need to 'fix' the issue of transfers in and out of Nest if it wished to implement its 'pot follows members' solution to the current problem of small pension pots. This makes the case even stronger for lifting the restrictions now."
Auto-enrolment began in October 2012 for the largest firms and will start for medium and small employers from 2014.

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