The new coalition government has signalled a willingness to rethink some aspects of the National Employment Savings Trust (NEST). New Pensions Minister Steve Webb has suggested there is scope to rethink the rules for auto-enrolment.
NEST is a pension scheme, previously known as personal accounts, that any employer can use to meet new workplace pension duties starting from 2012.
The scheme is being designed to meet the needs of low-to-moderate earners and their employers, although it has been criticised for being too expensive and poorly designed to meet the needs of these employees in the current pension framework.
Whilst the new government remains committed to auto-enrolment, they will reconsider how this is applied in practice.
Earlier this year, pension provider Aegon proposed that the earnings threshold for auto-enrolment should be increased to around £10,000, from the current £5,035. They also suggested that the maximum age should be 55, to help tackle potential conflict with means testing.
We continue to believe that NEST is a fundamentally flawed concept and that better results, at lower cost, could be achieved by utilising the pension schemes that already exist – particularly Stakeholder pensions which every employer is legally obliged to have designated for their employees.
