More details of new pension scheme for UK workers with no retirement savings revealed

News - Savings

Written by Ray Clancy

Monday, 11 January 2010 09:50

The UK wide pension scheme aimed at workers with no retirement savings options has been re-branded as NEST.

The National Employment Savings Trust is expected to recruit at least two million members by late 2016 from among workers earning between £15,000 and £30,000 year. The scheme, previously known as Personal Accounts, has been predicted to grow to as much as £150 billion and will see workers automatically enrolled from 2012.

Employees will pay 4% of their salary into their scheme and employers’ compulsory contributions will grow from 1 to 3% by 2017. There will also be a 1% contribution from government tax relief. Employers can start paying contributions to the pension scheme from next year on a voluntary basis.
It is aimed at ‘those people who have no engagement with savings today, let alone pensions, according to Tim Jones, the chief executive of the Personal Accounts Delivery Authority (PADA).

Defending the re-brand, which cost £363,000 and emphasizes the savings message by putting the NEST acronym inside an egg shaped logo, he added; ‘We need to understand what kind of product, including the way that product is represented with a brand and a logo, will work for them’.

Last month the government said in the pre-budget report that start-up companies would be exempted for up to three years from the scheme to give them freedom to spend cash how they wish while they become established.
Jones added that PADA has until the middle of 2010 to decide whether to appoint Tata Consultancy Services Ltd to provide administration services after competitors Logica UK, Great-West Retirement Services and Danish pension fund administration provider ATP pulled out of the race for the contract
If Tata’s bid won the mandate, members’ data would be kept in the UK and a call-centre would be housed in the UK, Jones said.

The first fund management appointments will be made in late summer this year, after a trustee body is appointed, he added.