Money Marketing round table - What next for pension reform?
Nest wrecks current provision
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Aviva has claimed that unless legislation is relaxed so the private sector can offer pensions to lower-earners, the Nest scheme will plough through current pension provision.
Aviva has claimed that unless legislation is relaxed so the private sector can offer pensions to lower-earners, the Nest scheme will plough through current pension provision.
Speaking at a Money Marketing pension round table last week, Aviva head of pensions Paul Goodwin said: “I am getting conflicting messages about just how much of a scheme of last resort the Tories would like Nest to be and how much it could creep into the bottom end of current provision.
“If they simplify legislation, we can move down the market a bit because we can take an awful lot of cost out but there will always be a point we will not go to because the economics do not work. There are conflicting views about where that point is and what exactly Nest should aim to do.
“Nest is going for everybody with between £5,000- £35,000 worth of income and then expecting to be complementary to current provision. No it is not, it is riding right through current provision. I think there is a belief that current provision is for high-net worth individuals only and that is simply not true.”
Aegon head of pensions management Rachel Vahey said that Nest will not automatically make people save enough for their retirement.
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Readers' comments (2)
Julian Stevens | 26 Feb 2010 11:16 am
So far, the PADA hasn't found anyone prepared to administer the scheme, they haven't worked out where the contributions will be invested and the overriding problem is that most NEST holders will merely be funding themselves out of means tested benefits that they'd get anyway by doing nothing and spending their contributions on more immediately pressing priorities.
AND, to cap it all, how can auto-enrolment into a NEST scheme possibly be perceived to be a remotely satisfactorily substitute for sorting out all the things that put people off funding a pension plan voluntarily? If ever there was a top heavy and chronically inefficient strategy to address the UK's lack of retirement saving then this must surely be it.
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George Sorars | 26 Feb 2010 6:19 pm
Another thing to keep in mind about the NEST is that it does not come with a TV either, which means you cannot your hands on an income from it until the powers that be decide that it is time for you to "retire".
Also what do you do if its performance is crap too? Presumably there will be some exposure to equities, which means that there will plenty of opportunities for corruption by the crony capitalist Labour Party. In that no doubt they will see that the peoples money is invested mainly in the shares of the companies of its billionaire mates.
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