A New National Pension Scheme
Helping people save more for their retirement
The National Employment Savings Trust (NEST) is being introduced next year by the government to help people save more for their retirement.
Option to Opt Out
It will involve workers who are not already a member of a ‘Recognised Workplace Pension Scheme’. Employees will be auto-enroled by their employers and will be given the option to opt out. The employer will eventually have to pay a minimum of 3 per cent (initially this is being phased in starting from 1 per cent paid by the employer and 1 per cent by the employee) of ‘qualifying (band) earnings’.
The overall minimum contribution will eventually be 8 per cent and if the employer pays the minimum of 3 per cent the employee will have to pay 5 per cent (with 1 per cent of this coming from tax relief). HSBC found that 23 per cent of people, when told about NEST, said they didn’t like the idea of some of their wages being paid into the scheme.
New Auto-Enrolment
The new auto-enrolment obligations will impact on employers of all sizes and will be phased in between 2012 and 2016. Employers will have responsibility for paying contributions into a pension – both from them and the employees – as well as communicating with staff and ensuring the pension scheme is compliant.
The hope is that these new autoenrolment obligations will help the estimated seven million workers who are not putting money aside for their retirement to start saving for tomorrow, today.
While the NEST scheme is available to all employers, it has features that may make it suitable for some and less desirable to others.
The National Employment Savings Trust is regulated by the Pensions Regulator.
More than half of workers are not aware that they could be automatically enrolled into a new national pension scheme starting in October 2012 and many are likely to be surprised when employers start taking deductions from their pay, research from HSBC has found.
2012 is the start of new phased autoenrolment.
3% is the minimum percentage the employer will eventually have to pay.
More than half of workers are not aware that they could be automatically enrolled into a new national pension scheme starting in October 2012 and many are likely to be surprised when employers start taking deductions from their pay, research from HSBC has found.