How Nest fits into the brave new world of auto-enrolment
Nest is being designed to make it easy for employers to engage directly with us at our website. But we also understand that advisers will need information about us so that they can support employers in learning how Nest fits in and what the product provides.
To recap on where Nest fits in - new duties established by the Pensions Act 2008 start to be introduced from October 2012.
For the first time, employers will have to enrol workers into a workplace pension scheme that meets or exceeds certain standards. Some of these workers will have to be enrolled automatically into this scheme and others only if they ask to be enrolled.
Employers will need to automatically enrol workers aged at least 22 but under state pension age who earn more than £7,475* in a year.
These people are known as eligible jobholders and their employers will have to make a minimum contribution into the pension scheme on their behalf.
Other individuals will have the right to ask to be enrolled into their employer’s pension scheme if they want to. Depending on their earnings, their employer may also make a contribution.
After the new employer duties start to be introduced, workers will have the right to opt out of the pension scheme they have been automatically enrolled or opted into within the first month of joining. If they choose to opt out in that first month, their contributions will be refunded.
Employers have to put in a minimum contribution, together with the worker’s contribution. The Government will contribute the rest in the form of tax relief.
The new duties affect the biggest to medium-sized employers during the time between October 2012 and July 2014 followed by small and micro employers from August 2014 to February 2016. The size of an employer’s largest PAYE scheme will determine at what point the new duties affect their organisation.
This means learning about reform and how employers plan to respond is likely to be a priority for many advisers.
Together with other qualifying schemes, this is where Nest fits in. Nest is a new, lowcost pension scheme available to all UK employers to help them meet their new duties. It is specifically designed to cater for people who are largely new to pension saving and the different types and sizes of organisations that employ them.
Employers do not have to seek advice when it comes to responding to pension reform and choosing a qualifying scheme but our research suggests many will seek information, including from advisers.
Nest Corporation’s predecessor body the Personal Accounts Delivery Authority carried out research in 2008/2009 among 3,000 organisations in the UK. This suggested that 90 per cent of UK firms intended to seek advice to help them understand the impact of the workplace pension reforms that start to be introduced from 2012.
We are in the final processes of developing the public-facing elements of the new Nest website, which will take over from the current corporate site later this year.
Employers that sign up to Nest - and intermediaries who have access to a client’s account and administer these accounts on their behalf - will have access to their own secure part of our transactional website. It is here where you will be able to set up and administer employers’ account and get helpful guidance at every stage. We are continuing to work with employers, advisers and trade bodies to provide information about Nest.
A critical challenge will be communicating with our members, helping them learn as much as they need to in order to keep saving once they are enrolled.
In January we published an initial phrasebook of terms we will use in Nest, based on research.We are working on the second edition of the phrasebook and appreciate your views. If you want to join in the discussion on language or find outmore about Nest, please visit our website
* This figure is contained in the Pensions Bill 2011 and could change before the Bill receives Royal Assent and becomes law or the provisions in the Bill come into effect. This figure will be reviewed every yearby the Secretary of State.
The pensions picture
- To find out about Nest in general visit www.nestpensions.org.uk or email us at inter firstname.lastname@example.org
- For more information on the Government’s planned changes to pensions, go to www.dwp.gov.uk/policy/pensions-reform
- Find out when the new duties will impact organisations at The Pension Regulator’s website at www.thepensionsregulator. gov.uk/pensionsreform/duty-dates-timeline.aspx