View more on these topics

Govt to take “long, hard look” at Nest

New Pensions Minister Steve Webb has kicked-off a review into the National Employment Savings Trust, suggesting the Government may shrink the scope for auto-enrolment.

Webb insists the coalition is commited to auto-enrolment, which was stated in the agreement last week. But he says the Government will take a “long, hard look” at Nest over the summer.

He says: “We are committed to the principle of automatically enrolling people. There are many millions of people who have company pension schemes but do not have any private savings and both parties supported the principal so we put it in the deal that we will go ahead with automatic enrolment.

“What we have said is that we will review the specific way in which that is done. As you know a contract was signed in April to set up the Nest corporation.

“We have got the chance to look at that again over the summer. There is a break in the contract, an option in the autumn but the commitment is to auto-enrolment, if auto-enrolment through Nest, as previously envisaged still looks like the best way we will go ahead with it.

“But we are going to take a long, hard look at it over the summer.”

Speaking to the Financial Times yesterday, Webb added: “The scope [of auto-enrolment] could be smaller than it is now.”

In April, Aegon called for the eligibility threshold for auto-enrolment to be doubled from earnings of £5,035 to around £10,000 and for those over 55 to be exempt in a bid to tackle the means-testing issue.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. The key point is that there is no need to confuse pension contribution compulsion with pension contribution administration.
    Just deal with compulsion, and let existing and/or new private schemes (with parameters to meet whatever charges/advice/fund objectives are thought important) deal with teh contributions. Most employers obey the law and so would in this case – those that dont prob wouldnt bother doing NEST properly either!! Employers are already obliged to do many things without State schemes having been set up in every case to help them do it – e.g. imagine if a State Accounting Service was set up to do the obligatory company accounts!)

  2. auto-enrolment

    what about a free choice or dont the serfs get a choice anymore

    “Once you admit that the individual is merely a means to serve the ends of the higher entity called society or the nation, most of those features of totalitarianism which horrify us follow of necessity.”

    – F.A. Hayek, The Road to Serfdom (1944)

  3. Julian Stevens 28th May 2010 at 1:31 pm

    What the government ought to be analysing, first and foremost (IMHO), is why there should be any need for auto-enrolment. As pointed out by Paul Lewis, auto-enrolment is tantamount to further government meddling with freedom of choice. The Conservatives have said that they want less government meddling and more freedom of choice.

    If retirement funding plans were made so attractive that only stupid or very poor people would be resistant to investing in one, then the burden of auto-enrolment could be largely avoided.

    A good place to start would be to make the structure and the administration of Personal Pensions as simple as those of ISA’s.

    Then restore Contributions & Life Insurance as integral elements and follow that by simplfying the contributions structure (30% of earnings for all, with one year’s carry back).

    Scrap the LifeTime Allowance, scrap the tax on dividend income and replace the annuity trap with the Pension Income Bond.

    It really isn’t very difficult at all ~ we just need some clear thinking on the subject. Are you reading this Mr Webb? I shall be writing to you shortly ~ as should be all the life companies who profess to being committed to improving retirement provision in this country but who, in practice, merely seem interested in trying to grab a bigger slice of the present horribly messy pie.

    In other words ~ CUT THE CRAP and get on with it.

  4. Philip Whitworth 28th May 2010 at 1:32 pm

    Agree fully with Paul. Lets get people saving into the framework already exists. The NEST concept scares the hell out of me as the logisics of a scheme being managed thousands of miles away is a receipe for disaster

  5. Sorry Julian Stevens, much as I may agree with you on a lot of things I totally disagree with you on auto enrolement. Auto enrolment is essential from a cost effectiveness point of view alone. provided as AEGON have suggested auto enrolement is done in a sensible manner i.e. earnings to be above a sensible level (I woudl say £15k and not 10k for aut enrolement), that is it on stakeholder or better charges, involes an employer matched contribution of a minimum of 3% and auto enrolement only to apply between the ages of 18 and 55.
    To Paul Lewis, auto enrolement does not mean people cannot then opt out, but it makes teh default entry to a pension. From experience, those who entered the GPPs and GSPPS we operated for employers with little or no fuss following a presentaiton to staff and option of individual discussion on the issue of pensions were more cost effective than those we had to get a stupid signature on to protect teh employer to PROVE they had actually declined an employer matching pension contribution of between 3 and 6% of earnings which they would not get in their packet instead. Lack of “entry bye default” commonly known as auto enrolment has been the biggest mistake of the previous governments many failures and especially of stakeholder. If it had been auto enrolment on day one it might actually have worked!

  6. Well,

    Slightly off-topic but I have it on good authority that TATA have deliberately mis-quoted their bid to win the contract for NEST in the first place….

    The plan is to sting the tax-payer when the money runs out.

    (I’ll be presenting this to the press and the DWP in due course).

    Interesting to see Legal and General gave them a plug, considering that they’ve outsourced their IT operations (resulting in some 600 redundancies) to TATA in June 2008.

  7. Expert Savings Advice 9th June 2010 at 7:23 pm

    We’ve been helping people with their financial planning needs since 1919. But what really sets us apart is our heritage and values.

    As the financial advisory arm of Ecclesiastical, we’re part of a company that was started by churchmen in 1887 and today gives a significant proportion of its profits to charity.

    Personal professional service

    With financial advisers based all over the UK, as well as a team of telephone advisers, we can give you advice face-to-face or over the phone, whichever is easiest for you.

    Whether you’re looking for a full financial review or have something more specific in mind – such as advice on savings, investments, taxation, retirement planning or protection for your family – our straightforward advice is tailored perfectly for you.
    We’ve been helping people with their financial planning needs since 1919. But what really sets us apart is our heritage and values.

    As the financial advisory arm of Ecclesiastical, we’re part of a company that was started by churchmen in 1887 and today gives a significant proportion of its profits to charity.

    Personal professional service

    With financial advisers based all over the UK, as well as a team of telephone advisers, we can give you advice face-to-face or over the phone, whichever is easiest for you.

    Expert Savings Advice

  8. Savings Accounts 11th June 2010 at 8:57 am

    Savings Accounts

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com