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Warning that early Nest savers will pay for those joining later

People who start saving into the national employment savings trust early on will end up subsidising those enrolled later, Towers Watson has warned.

Nest is set to charge members 2 per cent of all contributions on top of a 0.3 per cent annual management charge until the costs of setting up the scheme have been met but the Department for Work and Pensions will not give an estimate of when these costs will be paid off.

Towers Watson says that for someone enrolled in 2014 who contributes at the default rate for five years and then retires, the dual charge would be almost equivalent to a 1.5 per cent AMC.

Senior consultant Paul Macro says: “Nest should be cheaper but early joiners who are close to retirement face the sort of charges that the Government always said were unacceptable.”

Standard Life calculates Nest members will need to save into the scheme for 18 years for the dual charge to be better value than a 0.5 per cent AMC.



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  1. We should abandon the Nest madness now.


    Get the product providers to pitch a new type of personal pension charging, 1.5% pa AMC on a default fund (up to 1.9% max on additional added value funds) as a range of providers on a government backed scheme.

    All employers must set up one of these schemes or have another better provision in place, auto enrol for same Nest amount of earnings 5k 30 k etc..

    Have guaranteed switching between providers default funds, where they want added value funds they can first switch into providers of choice default fund, then make option choices as applicable.

    Have fixed life styling option that switches funds into cash funds (not standard life’s cash fund!!……) 3 years before SRA.

    Where people want to take advice the can fee based, most will probably not.

    Product providers will compete on service and investment performance, people will still have choice but will finally be compelled to save for their own retirement

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