Nest has cut the proposed contribution charge for savers from 2 per cent to 1.8 per cent.
Director of scheme development Helen Dean confirmed that the scheme will press ahead with the planned combination charge structure, which pairs the charge on new contributions with an annual management charge. The AMC, which will be levied on members’ total pension fund each year, remains unchanged at 0.3 per cent.
Dean says: “It is a very, very good charge level available to all members, which does approach the best in the market.”
In the longer term, after the initial set-up loan from the Government has been repaid, the contribution charge is expected to fall away, leaving the AMC as the sole remaining charge in line with the 2006 Turner Commission’s recommendations. A spokesman says “most modelling” suggests that this will be within 20 years, subject to market conditions.
Nest chief executive Tim Jones says: “We have a charge level which approaches levels only found in the best of today’s pension schemes. This is a level that our target market would be unlikely to access without Nest in the market.”
All decisions relating to charges, including any future amendments, will be made by the scheme’s trustee board, which currently has seven members. Nest confirmed that at launch the scheme will have nine to 15 trustees.
Hargreaves Lansdown head of pensions research Tom McPhail says: “It is very positive that they have managed to cut the charge even further. I think the overall terms are sufficiently attractive that people will buy into the scheme.”