Background and NEST
Background to workplace pension reforms
Back in 2002, the Government appointed the Pensions Commission (headed by Lord Turner) to review the adequacy of private pension saving in the UK. The Commission recognised that we are all living longer but, generally, are not putting enough aside to pay for our pensions in retirement.
They made various recommendations including automatically enrolling employees who were not already in a workplace pension scheme into a new National Pension Savings Scheme (now NEST and previously referred to as ‘Personal Accounts’), and for both employers and employees to make minimum contributions.
Over subsequent years, these recommendations have been developed, refined and clarified.The aim of the changes now being made is simply to encourage people to save for their retirement.
National Employment Savings Trust (NEST)
NEST is a new workplace pension scheme that is open to all employers to use for their UK-based workers. NEST can be used as an employer’s only pension scheme, or for just a particular group of employees.
It is a defined contribution (DC) scheme set up under trust and is run by a trustee body called NEST Corporation; a non-departmental public body accountable to Parliament through the Department of Work and Pensions.
NEST makes two types of charges on individual members - a flat rate charge of 1.8% of all money going into the member’s pot plus an annual charge of 0.3% of the member’s fund value – and uses retirement date investment funds as the default fund option, although other fund choices are also available.
More information about NEST is available at: www.nestpensions.org.uk.
