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The National Employment Savings Trust (NEST)

The Government has today outlined what it expects to charge for the National Employment Savings Trust (NEST), which will ensure the estimated seven million employees not saving adequately for their retirement will begin doing so by 2012.

Angela Eagle, Minister of State for Pensions and the Ageing Society said low and moderate earners have thus far not had access to a suitable low cost pension scheme. “NEST will put this right.” she claimed, adding, “This is a fair and sensible funding package which delivers the Pensions Commission's vision of a low cost scheme in an affordable way.”

By 2012 the Government will ensure all employees will automatically sign up to workplace pension schemes, one of which will be the NEST.

Expected charges for the NEST

The Pension Commission is tasked to provide a low cost scheme with an annual management charge anticipated to be around 0.3 per cent. A small additional charge on contributions of around 2 per cent will initially be included to meet the costs of establishing the scheme. This is comparable to low charges currently being paid by members of large occupational schemes.

Ultimately, all employees will be auto-enrolled into a workplace pension schemes unless they opt out or their employer provides automatic enrolment into a scheme that is at least as good – a quality test will have to be met, defined on either a benefit or defined contribution basis.

NEST is due to come on stream on a voluntary basis by mid 2011. Automatic enrolment will however, only be compulsory from October 2012.

Employers’ obligation to contribute to the scheme will go through a 4-year phasing in period based on the company size. 

For more information on National Employment Savings Trust (NEST), and how it may effect you as an employer or employee, contact an Independent Financial Adviser using the details below.

Pearson Hinchliffe Financial Services | Hollinwood Business Centre, Albert Street, Hollinwood, Gtr Manchester, OL8 3QL
Telephone: +44 (0)161 785 3500, Fax: +44 (0)161 624 2589, Email: enquiries@pearson-hinchliffe.co.uk