The National Employment Savings Trust, or NEST pension, is one pension scheme that employers can use to meet their pension auto-enrolment obligations. It is designed to be a simple, low-cost option and it will be available to all employers, regardless of size, salary levels, staff turnover or industry.
The National Employment Savings Trust or NEST Pension was introduced by the UK Government and will be operated by The NEST Corporation, a not-for-profit trustee corporation. It will be regulated by the Pensions Regulator.
The NEST pension scheme is in place to guarantee that all employers will have access to a pension scheme which they can utilise to fulfill their pension auto-enrolment obligations. It is designed for employers to use as the only pension scheme on offer to their employees, or to run alongside other pension schemes which may be in place.
NEST Pensions Charges
The NEST scheme has low charges which are based on an initial charge of 1.8% and an annual management charge of 0.3%. This is estimated to be equivalent to a scheme with an annual management charge of 0.5%
NEST will offer members the choice of risk rated Retirement Date Funds. These are specifically designed to target the members planned retirement date. In addition there are currently 5 funds that individuals could opt for as follows:-
- The NEST Ethical Fund
- The NEST Sharia Fund
- The NEST Higher Risk Fund
- The NEST Lower Growth Fund
- The NEST Pre-Retirement Fund
It is likely to suit a large number of UK employers, particularly those with transient workforces or a large number of low to middle earners. It may however be that there are other more suitable options for you to offer your employess, like Group Personal Pensions, Group Stakeholder Pension or Group SIPPs.
These other arrangements offer a far wider choice of funds, flexibility of contributions and extended options for those that wish to transfer in other (non NEST) legacy pension schemes,
NEST Pension requirements for UK Employers
From October 2012, unless you are already operating a company pension scheme that meets the required criteria, or you set one up, you will have to automatically enrol each eligible employee into the NEST pension scheme. The exact date will depend on your "staging date", determined by your business size. See our page on auto-enrolment staging dates for more details.
The NEST scheme (formerly known as the personal accounts pension scheme) is intended as a vehicle for lower earners who don’t have access to a good company pension arrangement. It It is designed to be a simple, low-cost way for these individuals to save, and will have a number of features that ensure it remains suitable for these individuals.
- Low charges.
- A limited choice of investment funds and a default fund for those who do not make a choice.
- An annual contribution limit of £3,600 a year (increased with earnings from 2005).
However, moderate to high earners or employees looking for a greater degree of choice and higher contribution levels may not find NEST the most appealing solution.
It may be that keeping up an existing scheme or establishing a new one could be the most effective benefit and retention tool for a varied range of staff.
Please contact us to arrange a FREE initial chat with one of our specialists to see how we may be able to work with you to manage the challenges of pension auto-enrolment and NEST pensions.