It began in Turner’s mind’s eye as the national pensions saving scheme, then turned into personal accounts and now the next incarnation for the new Government-sponsored pension scheme will be the National Employment Savings Trust or Nest.
I think Nest is quite neat. You can see why it would appeal to potential members and employers. It has links to nest egg and building up funds as well as security. The full title also has the all-important word trust even though in this context it refers to the structure of the pension scheme rather than the verb.
This was not a snap marketing decision. Pada spent 11 months working with external agencies to develop this new name and brand identity.
And as you would expect none of this came “cheep” please excuse the pun. It cost £363,000 (with £8,000 spent on the logo). This in itself is not unusual. Any company coming up with such a significant brand change expects to incur such costs. And like any other company, Pada will have to bear the costs of this research.
The next step is to make sure your audience is aware of your branding. Under typical occupational pension schemes, the employer would normally meet this cost. However, Nest is not a typical occupational pension scheme. Instead, the trustees have powers to publicise Nest and will have to meet those costs from the scheme.
Given that, unlike other providers, Pada has no capital, how are these costs going to be met? There are a few possible answers. The Government could meet them through subsidy, meaning Pada is under no obligation to repay. It could lend Pada the funds with no interest. Or it could charge Pada interest on the loan, either at a commercial or a lower rate. It is unclear which option is in play here.
If Pada has to repay a loan, then this will be taken from the membership charges over the long term. This will be one of many costs that has to be met by the members and again brings into focus the question of the structure and level of charges.
f a single management charge is set, it will be some time until the charges will be at a sufficient level to meet the ongoing costs, never mind the costs that have built up before launch. I am sure the Department for Work and Pensions’ announcement due soon on which charging shape it has chosen will create a new debate.
The unveiling of the Nest brand is a key step forward in the journey from Turner to launch but it is not sufficient on its own. Now we have the final regulations on how pension reform will work, it is up to the DWP to kickstart its public campaign on saving for retirement as soon as possible and with as much aplomb as possible. Pension reform will only work if we can convince people it pays to save.
Rachel Vahey is head of pensions development at Aegon