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CSR: Nest to go ahead in 2011

The Government has confirmed the National Employment Savings Trust will go ahead as part of the auto-enrolment reforms.

In a paragraph in today’s Comprehensive Spending Review, it says: “The Department for Work and Pensions settlement includes…funding for the introduction of auto-enrolment and the establishment of Nest, to help individuals save for their retirement and encourage high quality pension provision by employers.”

In a statement, Nest chief executive Tim Jones says: “The work we have been doing over the summer has ensured that Nest is now really taking shape and will be ready to launch in low volumes in 2011.”

Association of British Insurers director of life and savings Helen White says: “We welcome the commitment the Government has shown in pressing on with plans to get people saving, by announcing that they will introduce automatic enrolment into workplace pensions along with setting up Nest.

“We appreciate these are challenging financial circumstances, and that brings into sharp focus the need for people to save and plan for their retirement so that they can have a decent income when they stop working.”

Scottish Widows head of pensions market development Ian Naismith adds: “The insurance industry already provides high-quality pension arrangements for millions of people, but it is not commercially viable for it to serve small employers with lower-earning staff.

“Nest will provide simple, good value pensions for those who do not currently have easy access to pensions, and will complement existing provision.”

Nest’s reprieve follows months of uncertainty surrounding the future of the scheme. It has survived the Cabinet Office ’quango’ review, a three-man independent review of automatic enrolment and now the Chancellor’s Comprehensive Spending Review.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Low volumes? Now there’s a master of understatement….

  2. yet another waste of time and money

  3. Another example of the industry falling to live up to our social responsibility, i.e. not providing an alternative to Nest. Is it surprising we get no respect in the corridors of power?

    An opportunity missed

  4. NEST cannot go ahead unless or until the issue of managing the investment end of things has been finalised. That isn’t going to happen, because the terms on which the government is trying to force the contract onto the private sector are so ludicrously uncommercial, probably something in the region of 0.2% AMC and possibly even less.

    With the government’s own initial expenses recovery charge of 2% p.a. for at least 20 years plus whatever will need to be added to cover TATA’s admin services, there’s hardly much room for manoevre, is there? NEST with a 3.5% AMC would be laughable. So what are they going to do? The only thing they can do is hope that the private sector steps up to the plate with a charging structure that’ll fall somewhere between stakeholder and NEST.

    And the trouble on THAT front is that the private sector providers have been bitten once and aren’t going to allow themselves to be railroaded into a charging structure imposed on them by the government.

    The whole logic of the thing is a crock because, on the one hand, governments are commonly very good at spending other peoples’ money by the zillions (how much has PADA spent thus far?) but, on the other hand, they seem to think they can dictate to the private sector how it ought to run its own financial affairs.

    So what’s to be done? Scrap NEST as a costly white elephant and write off tens of millions of pounds of taxpayers’ money spent by PADA or give some ground, maybe a lot of ground, and hope the private sector comes to the rescue? A tricky dilemma with no small loss of face in prospect for the government.

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