NEST to allow employer contributions by debit card

The National Employment Savings Trust will allow employers to make scheme contributions using a debit card, a payment method most other providers shy away from.

Contributions can be made using a debit card or direct credit through NEST's new online system for employers, although the provider expects the majority of employers will use direct debit.

NEST said paying by debit card or direct credit incurs no additional charge but it does reserve the right to charge if the costs of these become prohibitive - although this is not expected.

Standard direct debit payments will incur no charges and NEST has no powers reserved to charge.

However, fees could be charged if an employer breaches NEST's terms and conditions, but the first approach is to discuss the issue first before levying any charge - and fees will cover NEST's costs only as it is a not-for-profit organisation.

Standard Life only allows debit card contributions for its stakeholder schemes.

Head of corporate strategy and propositions Jamie Jenkins said: "We did not introduce that across our subsequent corporate pension arrangements because there is very little demand for it."

Zurich pensions management director Dave Lowe said: "We have not seen any demand for it, however it is very much in mind as part of our 2012 development schedule."

Friends Life does not accept debit card payments for contributions, but is currently working on plans to accept direct debits for all members outside of contributions paid by the company.

NEST's online system for employers, seen by PP, also enables employers to customise delegate access to third parties, such as employee benefits consultants or IFAs.

Employers can further set the contribution payment frequency, as well as the earnings basis for contributions to a qualifying band of earnings or from first pound of pay.

NEST director of communications and development Graham Vidler (pictured) said: "As well as providing flexibility around payment methods, we're building-in increased flexibility around the due date of contributions and their frequency in order to align to more payroll cycles and improving our website's provision for downloading data, following discussions with large employers."