THE National Employment Savings Trust (Nest), key to the success of automatic enrolment into pensions at work, has hit its early target of 250,000 members and says opt-out rates are far lower than expected.

At a conference in London staged by the National Association of Pension Funds (NAPF), Nest Corporation unveiled a surprise jump from the disappointing 100,000 employees said last month to have been enrolled in Nest, the default scheme set up by government but required to be self-funding.

The NAPF, meanwhile, warned small firms facing auto-enrolment over the next four years that it would take longer than expected and "the message is give yourselves plenty of time".

Tim Jones, chief executive of Nest, said the opt-out rate among larger companies which are first in line for auto-enrolment were "fantastically ahead" of predictions, saying: "My personal guess was 17 to 18%, it looks to be more like five to 10%, and in some firms below five."

He said the big take-up reflected primarily "relief – people saying I knew I should be doing something but I didn't know how", with reinforcement from the government's "I'm in" campaign as well as "good communications from well-managed major corporates".

On the challenge for smaller employers, he said much hope was pinned on workers' "social-proofing" the decision by consulting friends, family and workmates.

Mr Jones said afterwards that membership would hit 500,000 by the end of the year, 1m by the end of 2014 and the target 2.5m within five years. "I am very confident about these numbers and that will make Nest viable."

He said the banning by Mr Webb of 'consultancy charging', which allows advisers to be paid through deductions from the employee's pension pot, would not leave the 'advice gap' warned of by financial advisers.

He said: "The end of consultancy charging means a level playing field, which will encourage other types of consultants such as general business advisers. I honestly believe that it will lead to more not less advice."

Consumer organisations and small business groups have urged pensions minister Steve Webb to scrap the contribution ceiling intended to prevent Nest from straying beyond its target market of lower earners.

Mr Jones said the restrictions had prevented it from attracting employers who wanted a single solution for their workforce, with Nest losing out for many big corporates to the likes of Legal & General.

"I don't think we expected the restrictions to have as big an impact, but lifting them is nothing to do with more volume for Nest, it's about making life easier for employers, especially as we get into the larger small businesses."

NAPF policy director Darren Philp said pensions minister Steve Webb's pursuit of further radical reforms, enabling 'pot follows member' when people change jobs, and promoting the creation of bigger collective workplace schemes to reduce costs, were fraught with risks.

He said: "We agree there is too much fragmentation but we urge the government to rethink and reconsider before legislating."

Sarah Healey, strategy director at the Department for Work and Pensions, standing in for Mr Webb who was steering the Pensions Bill through parliament, said the current agenda had "the potential to be the most radical reform of pension saving in this country for a very long time".

She said: "As more employers automatically enrol their workers and more people start saving, it may be that we start to see a different market unfold as consumers demand quality and transparency."

Darren Burton, a director at the Pensions Regulator, said the early signs from auto-enrolment were encouraging, but on the 3000 pension schemes in the market set up for 12 to 1000 members, he said: "This sector struggles with poor trustee knowledge and understanding of scheme rules."