NEST Pensions: NEST | National Employment Savings Trust Summary

The new legislation means all companies having to automatically enroll eligible employees into a contributory pension scheme. This obligation will be phased in, starting with the biggest employers in 2012.

The National Employment Savings Trust – NEST – is one pension scheme that will meet employer’s obligations. It is designed to be a simple, low-cost option and it will be available to all employers, regardless of size.

However, while it will have low charges, it will also have a very limited fund choice as well as initial restrictions on transfers and contribution levels.

The NEST Pension will be operated by The NEST Corporation, a not-for-profit trustee corporation and will be regulated by the Pensions Regulator.

TISCO Financial Planning Limited has no affiliation with NEST Corporation, the body responsible for the running and overseeing of the NEST Pension, nor is it authorized by, associated with or sponsored by NEST Corporation. [NEST Corporation's website can be found at www.nest.org.uk]

NEST is in place to guarantee access to a pension scheme. However, it may be that there are other more suitable options for you – especially for higher earners and those looking for a greater degree of investment control.

NEST Pension requirements for UK Employers
From 2012, unless you are already operating a company pension scheme that meets the required criteria, or you set one up, you will have to enrol each eligible employee into the NEST pension scheme.

The NEST scheme (formerly known as the personal accounts scheme) is intended as a vehicle for lower earners who don’t have access to a good company pension arrangement. 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).

The NEST Pension will operate as a centralised scheme run by a not-for-profit trustee corporation called NEST Corporation.  Like other company schemes it will be regulated by the Pensions Regulator.

What this means for UK Employers

On the face of it this could appear to be a good thing – a simpler way of meeting the new requirements than running, or setting up, a qualifying company pension scheme. However, it should be noted that the NEST scheme is unlikely to have as much appeal to moderate and higher earners, or to employees looking for a greater degree of choice and higher contribution levels. Keeping or setting up your own qualifying pension scheme could be a more effective benefit and retention tool for a broader range of staff.

We have produced a NEST and pension auto-enrolment strategy pack - a guide for employers.
Please register here to have your free copy emailed to you or contact us for more information or to speak to an adviser.