Laith Khalaf Pensions analyst Hargreaves Lansdown
I like the new name – people can refer to it as their nest or nest egg and can relate to it. But, ultimately, the name is only a small part of what is going on. The main issue is that auto-enrolment is going ahead and that is a very positive thing.
Of course, there are still obviously dangers lurking in the form of leveling down and the means-testing trap but the broad thrust of the reform and auto-enrolment is necessary and positive.
It might be a good thing that pensions are not mentioned in the new name. We are told that there are negative connotations with the word pension because a lot of the plans sold in the 80s and 90s did not really turn out well for people and as a result it is little wonder that people have a poor association with the word.
But it is very important to get Nest out there, to spread the message to the people. There are a lot of people who are going to be coming into contact with these new pensions who have never had a pension before and it is important to get the communications right so they understand what they have.
The British public needs to understand the value of what they are getting with Nest, not just to deter people from opting out but also for those who do stay to appreciate that the scheme is just the start of the process.
From this first step, I hope people realise that they should be making even more provisions for their personal pension.
There are lots of things that have to be solved with regard to the scheme but Nest is a solution to a much bigger problem and that is we as a nation were and still are to an extent facing a situation where millions of people will reach retirement without any private savings whatsoever. The 8 per cent band earnings that Nest will bring people will not completely resolve that problem. People will still reach retirement with small pension pots but it goes some way to side step the crisis somewhat.
Richard Smith principal The Finance Zone
The Government can call it what it likes but all the while people are extremely concerned about their pensions provisions and this is doing absolutely nothing for them. The point of any branding is to understand the scheme but you have to remember that not everyone is very bright – people need to understand that they are contributing to and are part of some form of pension. It seems as though this Government does not want to call things what they really are – it has a real fear of using the word pension.
This whole scheme is just madness. This Government and governments of the recent past have misunderstood pensions and their original purpose and have instead tweaked and tweaked at things by using short-term political processes to change things that will ultimately be scrapped by the next guy.
We have a great system in place in the UK already and it is called the state pension. The Government should not bother trying to set up a scheme or dress something up with a new name for someone who is earning less than £25,000 a year because there is already something for those people.
With the state pension, everyone is a member, it is auto-matically paid for through National Insurance contributions and everyone understands how it works. If we promised to boost their state pension above sustenance level for just a few extra pounds of investment a week, it would work.
The Government has failed to understand the man on the street. The people who really need to make provisions for retirement cannot afford it because poor people cannot afford to save.
This rebranding exercise does not detract from the fact that there is a real problem in the country with regard to pension provisions and people saving for their retirement.
No one wants to genuinely take on the issue – the Government is just dressing up the problem round the edges and not actually doing something about it. To call this Nest is to just put it into the same bracket as the tax credit – people will not know what it is and they will not know what it offers them.