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Nest talks with FSA over RU64 rule

Nest is holding discussions with the FSA over the possibility of applying the RU64 rule to the Nest auto-enrolment scheme.

The RU64 rule states that advisers recommending a pension that is not stakeholder have to explain in writing why the recommended policy is “at least as suitable as a stakeholder pension.”

Speaking at the Tenet annual business conference in Ascot last week, Nest head of intermediary distribution Roy Porter said: “Our chief executive has talked to the FSA about applying the RU64 rule to Nest. As far as Nest is concerned, we are looking at a very simple, transparent online proposition.”

Standard Life head of pensions policy John Lawson says: “Nest is a very basic scheme. If we were selling a group personal pension in the market to satisfy auto-enrolment rules, we might typically tailor that to suit their employees. Therefore, it is unrealistic to say that Nest would be more suitable.

“We also have to remember that Nest is an untested supplier. It would be rich to ask advisers to consider whether what they were recommending is more suitable than Nest when Nest does not even exist today and we do not yet know what it looks like.”

Tax Incentivised Savings Association director of policy Malcolm Small believes that the RU64 rule was retained at least in part with a view to it being applied to Nest.

But he says: “I am slightly nervous about looking across two pension architectures, from contract-based regimes to occupational regimes, by way of RU64.”

The Retirement Adviser director Nick Flynn says: “Nest could be a sensible benchmark but I think to impose the RU64 rule would be a bit excessive.”


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. NEST is not the answer to making people save for their retirement (sorry I should have said “forcing” people to save for their retirement).

    Lower taxes would help a lot and giving people choice where they should save their money would also.

    This will just be regarded as another tax and given the average person has to work 5 months before they start earning any money for themselves this just makes matters worse. (Britons will work for 149 days to pay their taxes in 2011, according to respected free-market think tank the Adam Smith Institute.)

    I can see why NEST is attractive to Government as unless I am mistaken much of the money will be invested in low risk funds investing in UK Gilts which is like lending money to the Government, so you can see the attraction for any Government to have a ready made money pot to draw from, but will it be any good for people’s retirement and will it solve our retirement funding issues I am not so sure.

  2. Well doesn’t this confirm what many of us thought all along? That those who are responsible for shovelling this manure of a scheme are worried about take up – even before it is launched.

    John Lawson at Standard is on the right tack. It isn’t difficult under stakeholder (for the right clients) and it won’t be difficult under Nest to justify not using it. Admittedly if you have clients paying in less that £4k a year you may struggle to justify a decent plan, but overall I don’t think too many IFAs are going to loose any sleep.

    Apart from anything else haven’t the purveyors of rubbish any idea how poor the service, the reporting and the paperwork is from these cheap and nasty plans?

    What next I wonder – making it compulsory to wear Primark suits?

  3. Fraser Brydon - IFA 4th February 2011 at 9:23 am

    Who are TATA and why would I recommend a plan which cannot be transferred, have only few funds options, no admin experience, high costs, is funded by the investor…etc etc.
    NEST is a complte rip off targeted at those who can least afford it – bin it now.

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