Nest Summary and Key Facts

The government has introduced new legislation which means all companies will have to automatically enrol their eligible workers into a contributory pension plan. This requirement will be gradually phased in, beginning with the largest employers in 2012.

NEST (National Employment Savings Trust) is a pension scheme which has been designed to meet the employer’s responsibilities. It has been designed to be a low cost option, simple and available to all employers, irrelevant of their size. Although it has been designed to have low charges, it will have a limited range of fund choices available as well as restrictions on initial transfers and levels of contributions.

The National Employment Savings Trust pension scheme will be operated by the NEST Corporation; they are a non-profit corporation run by trustees and will be governed by the Pensions Regulator.

NEST has been designed to provide employees with access to a pension plan. However, there may be other pension schemes which are more suitable to an individual’s circumstances. For high earners and others requiring more diverse investment options, then NEST may not be suitable.

NEST Pensions and Employers Requirements

From October 2012, employers will be required to auto enrol eligible employees into the NEST Pension Scheme (unless you already have a company pension scheme which meets all the qualifying criteria or you have already set up a qualifying scheme).

The NEST Pensions scheme – previously known as Personal Accounts Delivery Authority (PADA) – is designed as a mechanism for employees on lower earnings who may not have access to a company pension scheme. It is intended as a low cost, simple way for employees to save money for their retirement. It will also have features which make sure it’s ongoing suitability.

  • Low Fees
  • A default investment fund
  • Limited choice of investment funds
  • A limit of £4200 a year contribution level

The National Employment Savings Scheme will be a non-profit corporation operated centrally by the NEST Corporation and will be under the regulatory control of the Pension Regulator.

How does this affect Employers in the UK?

On first review the NEST Pension Scheme seems to be a good thing for employers. It’s an easier way of setting up a qualifying pension, than initiating and implementing a company pension scheme. It’s worth noting however, that the NEST scheme isn’t likely to appeal to those who are on higher earnings or for employees who require a larger choice of investment funds and greater contribution levels.

Starting your own qualifying company pension scheme may be a more suitable way to recruit, retain and offer an effective employee benefit to the majority of your workforce.

We have designed an Employers Guide to the new pension rules. Please register your details opposite to download your free copy, alternatively please contact us for further information or to speak to a workplace pension specialist.