The government is set to remove restrictions placed on the National Employment Savings Trust (NEST) that limit the amount individuals can contribute towards their pensions and prohibit the transfer into or out of another scheme.
Nest is the publicly backed pension provider set up to accommodate businesses looking to offer an auto-enrolment scheme, either on its own or alongside an existing pension scheme.
According to a Nest spokesperson, since its establishment following the Pensions Act 2008, the government has limited total yearly contributions to £4,600, and disallowed the transfer of pots between Nest schemes and those of other providers.
However, it has now said it will remove these restrictions in April 2017. It said in a statement that the move was intended "to ensure all businesses can be confident that this low cost and easy to use scheme is among the options they can choose to enrol their workforce".
Nest currently has more than 1.5 million scheme members and is working with more than 8,900 employers.
The scheme is required by the government to accept any worker automatically enrolled by their employer, and Nest receives state financial aid in recognition of this.
The constraints were imposed to balance against that extra help and prevent Nest from having an artificial competitive advantage.
However, instead of protesting that Nest would have an unfair advantage, major pension provider Aviva commended the move.
A spokesperson said: "The restrictions on Nest add unnecessary complexity to employers' decision-making. Employers who want to choose Nest to meet their auto-enrolment duty should be free to do so without having to worry about artificial limits on contributions and barriers to transfers."
The spokesperson pointed out that the contribution cap would affect very few people. Even with 8% contributions, an employee would need to be earning about £50,000 to hit the cap.
"We therefore see no reason why the annual contribution limit should not be removed."
Sean McSweeney, auto enrolment specialist at advice firm Chase de Vere, argues that the current constraints could also mean workers' pensions are restricted simply because they work at a smaller company.
This is because the proposed workplace pension price cap of 0.75% - to be introduced from April 2015 - could mean many providers decide it's not profitable for them to offer a service to small employers, who may therefore have no other choice but to turn to Nest.
This article was written for our sister website Money Observer