The Confederation of British Industry has attacked the Nat-ional Employment Savings Trust’s “high and complicated charges”, warning that they could deter millions of savers.
The Department for Work and Pensions says Nest will charge 2 per cent on all contributions and an annual management fee of 0.3 per cent until it recoups set-up costs, which it predicts will take 20 years.
But the CBI says businesses are concerned that low-paid staff will balk at the cost in earlier years, which may prompt them to opt out even if they would be better off in Nest over the long term.
It says for the first 16 years after a pension opens, a saver in a private sector scheme with an AMC of 0.4 per cent and contributing £1,000 a year would be better off than if they were in the Nest scheme.
Even an AMC of 0.6 per cent will be more attractive than Nest for the first six years.
Deputy director general John Cridland is calling for the next Government to review the structure of the fees. He says: “The risk is that many people will think that they are getting a raw deal and will quit the Nest scheme.”