The Work and Pensions Select Committee believes the cap on contributions to auto-enrolment pensions should be lifted.

The Committee published its report into auto-enrolment in workplace pensions and the National Employment Savings Trust (Nest) this week.

One point raised in the report referred to the contribution cap of eight per cent or £4,200 per year and recommended that it should be lifted before the review in 2017.

The current cap is aimed at ensuring low and moderate earners contribute to the scheme but some are concerned it would prevent high earners from using Nest.

Those earning more than £53,000 would breach the yearly limit and may require a separate scheme, causing further complexity for businesses. The Committee said the cap on contributions should be removed as a ‘matter of urgency.’

But firms were concerned by the action, Adrian Boulding, pensions strategy director at Legal and General, said: “There is a strong social need for a national savings scheme amongst the low paid and hitherto un-pensioned, the majority of whom may be working for small employers.

“These restrictions keep Nest tightly focused on areas where the nation needs it. Removing the restrictions before the scheduled review in 2017 would risk Nest becoming distracted to the detriment of the very consumers it was created for.”

Martin Palmer, head of corporate benefit marketing at Friends Life, said: “We believe that it would be wrong to review the contributions cap on Nest before the original planned date of 2017, especially given the staging dates for some schemes have been pushed back.

“By 2017 existing providers will have aligned their systems, processes and business modes with auto-enrolment requirements, enabling a level playing field for competition. Removing the cap would allow contributions at a rate higher than those for whom the product was initially designed.”